Bond and Stock Market Response to Unexpected Earnings Announcements
- 1 December 1993
- journal article
- research article
- Published by JSTOR in Journal of Financial and Quantitative Analysis
- Vol. 28 (4) , 565-577
- https://doi.org/10.2307/2331166
Abstract
This study examines whether earnings changes convey information in bond markets and finds a significant positive (negative) reaction to unexpected earnings increases (decreases). The results are consistent whether earnings announcements precede or follow dividend announcements. Thus, earnings surprises convey information to bond markets and changes in firm value are split among bondholders and stockholders. This is in contrast to evidence from studies examining unexpected dividend announcements where bond price reaction is asymmetric. Cross-sectional analysis reveals that bond excess returns are positively related to earnings surprises.This publication has 3 references indexed in Scilit:
- Open-market stock repurchases as signals for earnings and risk changesJournal of Accounting and Economics, 1991
- Repurchase tender offers and earnings informationJournal of Accounting and Economics, 1991
- Earnings and Dividend Announcements: Is There a Corroboration Effect?The Journal of Finance, 1984