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Nonfinancial 8-K disclosures and individual investors' trading during earnings announcement window

Author

Listed:
  • Jinglin Jiang
  • Weiwei Wang

Abstract

Purpose - This study investigates the influence of nonfinancial 8-K disclosures released during the earnings announcement window on the abnormal trading activities of individual investors. Design/methodology/approach - We employ regression analysis in this empirical study to examine the impact of nonfinancial 8-K filings on individual investors' abnormal trading activities. Findings - Our results reveal that individual investors exhibit higher levels of abnormal trading activities when firms release nonfinancial 8-Ks during the (0,1) window of earnings announcements. This effect is observed for both buyer-initiated and seller-initiated transactions and is particularly pronounced for firms reporting an operating loss. Negative sentiment in 8-Ks significantly intensifies such effect. Additionally, we find that buy-sell consensus increases significantly with concurrent nonfinancial 8-Ks. This suggests that 8-Ks may reduce information noise, leading individuals to trade with greater conviction. Originality/value - Our study examines the joint influence of nonfinancial 8-Ks and earnings announcements on individual investors' trading activities, thereby providing a novel perspective on the mechanisms through which 8-K filings affect individual investors' trading behaviors.

Suggested Citation

  • Jinglin Jiang & Weiwei Wang, 2024. "Nonfinancial 8-K disclosures and individual investors' trading during earnings announcement window," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 21(1), pages 218-249, August.
    • Handle: RePEc:eme:ijmfpp:ijmf-07-2023-0341
    DOI: 10.1108/IJMF-07-2023-0341
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    More about this item

    Keywords

    Accounting disclosure; Market microstructure; Individual investors' trading; G14; G31; M41;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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