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Overreaction to Intra‐industry Information Transfers?

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  • JACOB THOMAS
  • FRANK ZHANG

Abstract

Prior research has documented that earnings announcements provide information not only about the announcing firm but also about other firms in the same industry. We document a stock market anomaly associated with this phenomenon of intra‐industry information transfers by showing that the stock price movements of late announcers in response to earnings reported by early announcers are negatively related to subsequent price responses of late announcers to their own earnings reports. Apparently, the stock market overestimates the intra‐industry implications of early announcers' earnings for late announcers' earnings, and that overestimation is corrected when late announcers disclose their earnings.

Suggested Citation

  • Jacob Thomas & Frank Zhang, 2008. "Overreaction to Intra‐industry Information Transfers?," Journal of Accounting Research, Wiley Blackwell, vol. 46(4), pages 909-940, September.
    • Handle: RePEc:bla:joares:v:46:y:2008:i:4:p:909-940
    DOI: 10.1111/j.1475-679X.2008.00294.x
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    References listed on IDEAS

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