A Behavioral Shift in Earnings Response After Regulation FD
- Authors
- Kwag, Seung Woog
- Issue Date
- Sep-2014
- Publisher
- ROUTLEDGE JOURNALS, TAYLOR & FRANCIS LTD
- Keywords
- Regulation FD; Forecast bias; Investor behavior; Random effects; Fixed effect
- Citation
- JOURNAL OF BEHAVIORAL FINANCE, v.15, no.3, pp 184 - 194
- Pages
- 11
- Journal Title
- JOURNAL OF BEHAVIORAL FINANCE
- Volume
- 15
- Number
- 3
- Start Page
- 184
- End Page
- 194
- URI
- https://scholarworks.sookmyung.ac.kr/handle/2020.sw.sookmyung/5853
- DOI
- 10.1080/15427560.2014.939749
- ISSN
- 1542-7560
1542-7579
- Abstract
- The Regulation Fair Disclosure of 1999 (FD) intends to promote the full and fair disclosure of price information and further prevent insider trading. As a result, the public investors are expected to be empowered with more quality and relevant information. This study examines a behavioral shift in investor reaction to quarterly earnings announcements after the passage of the FD due to the expected improvement in information asymmetry. The empirical findings suggest that investors show a behavioral shift after the FD in response to biased earnings forecasts. Investors become more active in that they place a discount on optimistic earnings forecasts during the earnings announcement period. It is less obvious that they place a premium on pessimistic forecasts. Another coherent finding is that investors attempt to correct for the announcement-period mis-adjustments during the post-announcement period.
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