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Changes in share prices as a response to earnings forecasts regarding future real profits

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  • Leszek Czerwonka

    (Faculty of Economics, University of Gdansk, Poland)

Abstract

One of the analytical methods in financial economics is an event study. The event study allows to measure influence of some information (for example: changes at the board of directors, merger no-tices, and other) on value of companies. According to the event study method the abnormal change of price is measured, which is caused by disclosing the information. The aim of this study is to measure the influence of disclosing initial earnings forecasts on share prices as well as examination of the rela-tionships between abnormal returns and prospective profits of companies. Each new, additional piece of information has influence on share price, however, it should still be the object of investigations how investors connect each piece of information with share prices.

Suggested Citation

  • Leszek Czerwonka, 2009. "Changes in share prices as a response to earnings forecasts regarding future real profits," Analele Stiintifice ale Universitatii "Alexandru Ioan Cuza" din Iasi - Stiinte Economice (1954-2015), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 56, pages 81-90, November.
    • Handle: RePEc:aic:journl:y:2009:v:56:p:81-90
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    References listed on IDEAS

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    7. Fama, Eugene F, et al, 1969. "The Adjustment of Stock Prices to New Information," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 10(1), pages 1-21, February.
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