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The share is down 8% after the profit warning, is it time to buy?

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  • J. Spohr

Abstract

Variables explaining the market response to a profit warning are of interest to both market participants and the managers of the firm. Several variables have been used in previous research to explain the market response to profit warnings with varying outcomes. This study uses a framework of surprise and risk to explain the market response and tests it on a sample of 474 profit warnings collected from Nasdaq OMX Nordic. The findings show that surprise and risk variables can be used to estimate the size of the market response to a profit warning.

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  • J. Spohr, 2014. "The share is down 8% after the profit warning, is it time to buy?," Applied Economics Letters, Taylor & Francis Journals, vol. 21(8), pages 556-559, May.
    • Handle: RePEc:taf:apeclt:v:21:y:2014:i:8:p:556-559
    DOI: 10.1080/13504851.2013.875100
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    Cited by:

    1. Wang, Lu & Ma, Feng & Niu, Tianjiao & Liang, Chao, 2021. "The importance of extreme shock: Examining the effect of investor sentiment on the crude oil futures market," Energy Economics, Elsevier, vol. 99(C).
    2. Cox, Raymond A.K. & Dayanandan, Ajit & Donker, Han & Nofsinger, John, 2017. "The Bad, the boom and the bust: Profit warnings over the business cycle," Journal of Economics and Business, Elsevier, vol. 89(C), pages 13-19.
    3. Adel Almasarwah, 2020. "Stock Price Informativeness and Profit Warnings: Empirical Analysis," Proceedings of the 19th International RAIS Conference, October 18-19, 2020 001aa, Research Association for Interdisciplinary Studies.

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