Business, Management and Accounting
4 years ago

Big earnings surprises drive stock prices, losses not value relevant.

RePEc: Research Papers in Economics
"Relevance of Earnings Levels and Surprises: Evidence from Manufacturing Firms in Japan" (in Japanese)
Takashi Obinata

Paper Summary

The article investigates how earnings affect stock prices in Japanese manufacturing firms. They found that negative earnings changes contain more temporary earnings, while large positive changes are more persistent. Losses are generally not important for stock prices. Controlling for these factors greatly improves the relevance of reported earnings.

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