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The Information Content of Earnings on Stock Prices: The Kuwait Stock Exchange

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  • Rashid Al-Qenae

    (University of Kuwait, Kuwait)

  • Carmen Li

    (University of Essex, UK)

  • Bob Wearing

    (University of Essex, UK)

Abstract

This paper investigates the incremental information content of earnings and other macroeconomic variables for share prices within the ‘prices leading earnings’ framework. We find evidence supporting the phenomenon of ‘prices leading earnings’ for the Kuwait Stock Exchange (KSE) after controlling for basic macroeconomic indicators. That is, the estimated earnings response coefficient is found to be sensitive (and significant) to the leading periods and it increased when more leading periods were included. The results suggest that prices anticipate earnings and hence provide useful information to KSE investors

Suggested Citation

  • Rashid Al-Qenae & Carmen Li & Bob Wearing, 2002. "The Information Content of Earnings on Stock Prices: The Kuwait Stock Exchange," Multinational Finance Journal, Multinational Finance Journal, vol. 6(3-4), pages 197-221, September.
    • Handle: RePEc:mfj:journl:v:6:y:2002:i:3-4:p:197-221
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    References listed on IDEAS

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    Cited by:

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    2. Guttler, Caio & Meurer, Roberto & Da Silva, Sergio, 2006. "Informational inefficiency of the Brazilian stockmarket," MPRA Paper 1980, University Library of Munich, Germany.
    3. Antonis Demos & George Vasillelis, 2007. "U.K. Stock Market Inefficiencies and the Risk Premium," Multinational Finance Journal, Multinational Finance Journal, vol. 11(1-2), pages 97-122, March-Jun.
    4. Oyetayo Oluwatosin J & Adeyeye Patrick Olufemi, 2017. "A Robust Application of the Arbitrage Pricing Theory: Evidence from Nigeria," Journal of Economics and Behavioral Studies, AMH International, vol. 9(1), pages 141-151.
    5. David UMORU & Alexander Olawumi DABOR, 2019. "Empirical Analysis Of The Relationship Between Macroeconomic Factors And Stock Returns In Nigeria," Management Strategies Journal, Constantin Brancoveanu University, vol. 43(1), pages 38-46.
    6. Sergio Da Silva & Roberto Meurer & Caio Guttler, 2008. "Is the Brazilian stockmarket efficient?," Economics Bulletin, AccessEcon, vol. 7(1), pages 1-16.
    7. A. Vijayakumar, 2010. "Effect of Financial Performance on Share Prices in the Indian Corporate Sector: An Empirical Study," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 35(3), pages 369-381, August.
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    More about this item

    Keywords

    earnings response coefficients; Kuwait Stock Exchange; price-leading earnings;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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