دانلود رایگان مقاله بد رونق ورشکستگی هشدارهای سود طول چرخه کسب و کار

Abstract

We examine the market reaction of profit warnings (PWs) over the business cycle in the U.S. during 1995–2012. The average PW is associated with a −13.38% abnormal return during the announcement day. This is substantially higher than the abnormal return of firms who announce a negative earnings surprise without previously warning about it. We also find that the PW stock market reactions are asymmetric during the business cycle. Negative stock market reactions are greater in magnitude during expansion periods than during contraction periods. Theory suggests that this is because bad news is not expected during good times, so when it is announced, investors have a greater update to their beliefs.

6. Conclusions

We provide empirical evidence that business cycles, financial regulations, analyst’s forecasts and firm-specific attributes affect the market response to profit warnings. Firms that issue profit warnings experience negative abnormal returns during the announcement period. The negative stock market effects are substantially higher for PW firms compared with nonwarning firms with negative earnings surprises. In addition, the negative abnormal returns start to accumulate prior to the announcement, indicating the occurrence of information leakage or market anticipation, or both. The impact of PWs has declined over time as the financial regulation of the Sarbanes-Oxley Act has integrated into business, increasing overall information transparency and thus reducing surprises.