2003
Profit warnings and timing
Publication
Publication
Financial Review , Volume 38 - Issue 4 p. 497- 513
We find that profit-warning announcements elicit a strong negative market response that is not sensitive to timing the warning in advance of the earnings announcement. Share prices begin to adjust about five days before a profit warning, and the market response is not complete until about five days after the warning. The accumulated response over the 11-day period ending five days after the announcement is -21.7%. The profit warning effect over the two-day announcement period is 32 times the valuation effect upon subsequent release of the actual earnings. There is no evidence of a reversal after this period, and therefore no sign that the market response is excessive.
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doi.org/10.1111/1540-6288.00057 | |
Financial Review | |
Organisation | Sprott School of Business |
Jackson, D, & Madura, J. (Jeff). (2003). Profit warnings and timing. Financial Review, 38(4), 497–513. doi:10.1111/1540-6288.00057
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