دانلود رایگان مقاله استراتژی شرکت و واکنش بازار به درآمد

Abstract

We examine whether a firm's strategy affects the information content of the firm's earnings announcement. A cost leadership strategy is characterized by low sales margins coupled with large sales volumes, economies of scale and major investments in plant and physical assets, whereas a differentiation strategy involves high sales margins achieved through product quality and branding realized by investments in intangibles such as R&D and advertising. These characteristics of the strategies result in differential impact on investor reactions to new information that is revealed about firms. Our results show that firms pursuing a cost leadership strategy have earnings announcements that are more commonly interpreted and result in a greater change in the average belief about stock price. On the other hand, earnings announcements of firms pursuing a differentiation strategy result in more heterogeneous interpretation accompanied by a smaller change in the average belief about stock price. This paper advances our understanding of the cross-sectional variation in the market's reaction to earnings announcements. In addition, the paper demonstrates a predictable instance of divergence in the price reaction and trading volume reaction to an earnings announcement.

6. Conclusions

and discussion In this study, we investigate the cross sectional variation in the information content of earnings by investigating the information content of earnings of firms that follow different strategies. We conceptualize the strategy pursued by firms using the Porter (1980, 1985) framework which identifies two strategic dimensions: cost leadership and differentiation. Prior research is used to establish that cost leadership strategies depend on economies of scale, large volumes and low margins to implement their strategy while differentiation strategies depend on product uniqueness brought about through investments in R&D and advertising. We argue that the information environment of the firm is a joint function of the investment decisions made by the firm, the accounting treatment those investments received, the voluntary disclosure decisions made by the firm, the coverage decisions made by information intermediaries and the individual efforts made by investors in acquiring private information. Each of the characteristics is likely to vary with the firm strategy and, thus, affect the role that the earnings announcement plays in informing and changing investor belief. The direction of the effect is difficult to determine a priori and, thus, is an empirical question