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Market reaction to the disclosure of external explanations given by managers for poor results
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Orientador(es)
Resumo(s)
The studies of voluntary disclosures, made by managers during earnings
announcements, have become very important in the capital markets literature. In these
announcements managers may make disclosures to explain their company’s performance.
Barton and Mercer (2005) present an experimental study suggesting that analysts react
negatively to excuses in disclosure for external events when they are implausible and
neutrally when they are plausible. This study extends their findings using archival data. In
this study, it is considered two different external events, September, 11th and the Iraq War,
testing the effect in the real stock market.
Results reveal a positive market reaction to the mention of a negative impact in firm’s
results. This is valid for both September, 11th and the Iraq War. Data also suggests that the
simple reference to these events, in a negative way, brings a negative (positive) reaction for
the September, 11th (the Iraq War) case.
Descrição
A Work Project, presented as part as the requirements for the Award of a Masters Degree in Finance from the Nova School in Business and Economics
Palavras-chave
External explanations Market reaction Voluntary disclosure