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Stock price reactions to earnings announcements: evidence from Chinese markets

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  • Dongwei Su

Abstract

We examine the stock price reactions to changes in earnings per share (EPS) in the Chinese stock markets. We find that domestic A‐share investors do not correctly anticipate the changes in earnings and fail to adjust new earnngs information quickly, but international B‐share investors can predict earnings changes better than A‐share investors. As a result, abnormal returns (ARs) can be obtained by trading on the earnings information, but for A shares only. An explanation is that most A‐share holders are individuals with short‐term investment horizon while most B‐share holders are large institutions that trade on more detailed and accurate financial information not immediately available to A‐share holders.

Suggested Citation

  • Dongwei Su, 2003. "Stock price reactions to earnings announcements: evidence from Chinese markets," Review of Financial Economics, John Wiley & Sons, vol. 12(3), pages 271-286.
    • Handle: RePEc:wly:revfec:v:12:y:2003:i:3:p:271-286
    DOI: 10.1016/S1058-3300(02)00085-X
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    References listed on IDEAS

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    1. Deng, Chao & Li, Shiyu & Hong, Yun, 2024. "When local and foreign investors meet the Chinese government's risk perception about COVID-19," Journal of Multinational Financial Management, Elsevier, vol. 74(C).

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