What drives the increased informativeness of earnings announcements over time?

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalNot applicablepeer-review

30 Scopus Citations
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Author(s)

  • Daniel W. Collins
  • Oliver Zhen Li
  • Hong Xie

Detail(s)

Original languageEnglish
Pages (from-to)1-30
Journal / PublicationReview of Accounting Studies
Volume14
Issue number1
Publication statusPublished - Mar 2009
Externally publishedYes

Abstract

Landsman and Maydew (J Acc Res 40:797-808, 2002) document that the information content of earnings announcements has increased over the past three decades, and Francis et al. (Acc Rev, 77:515-546, 2002) conclude that expanded concurrent disclosures in firms' earnings announcements, especially the inclusion of detailed income statements, explain this increase. We posit and find that the temporal increase in the intensity of the market's reaction to Street earnings offers a competing explanation for the Landsman and Maydew finding. We also find that expanded concurrent disclosure of GAAP-based information contributes to the temporal increase in the information content of earnings announcements. However, unlike Francis et al., we find that the temporal increase in concurrent balance sheet and cash flow statement information dominates concurrent income statement information once we control for Street earnings. © 2007 Springer Science+Business Media, LLC.

Research Area(s)

  • Abnormal returns, GAAP earnings, Information content, Return volatility, Street earnings, Trading volume

Citation Format(s)

What drives the increased informativeness of earnings announcements over time? / Collins, Daniel W.; Li, Oliver Zhen; Xie, Hong.

In: Review of Accounting Studies, Vol. 14, No. 1, 03.2009, p. 1-30.

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalNot applicablepeer-review