Discussion of aggregate market reaction to earnings announcements

  • Shivakumar L
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Abstract

The article discusses "Aggregate Market Reaction to Earnings Announcements," an article published in this issue which examined the relationship between corporate profit announcements in corporate financial statements and general economic conditions by seeking to examine the effect on overall stock prices of those earnings announcements. The authors of that article documented that positive announcements of increases in corporate profits tended to have an immediate negative influence on overall stock prices, and theorized that this could be due to the fact that investors interpreted a rise in present profits to mean a likely rise in interest rates in the future. Future research is suggested on stock market reaction to announcements of macroeconomic information to more accurately determine the role of earnings information on stock prices.

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Authors

  • Lakshmanan Shivakumar

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