The Effects of Uncertainty on the Informativeness of Earnings: Evidence from the Insurance Industry in the Wake of Catastrophic Events
This study examines the effects of uncertainty associated with large-scale catastrophes on the informativeness of earnings announcements by property and casualty insurers. It contributes to the literature on the effects of uncertainty on the informativeness of earnings announcements by distinguishing between: (1) uncertainty due to exogenous events that obscure the firm's future prospects, and (2) uncertainty due to noise in earnings. Results suggest that heightened uncertainty associated with exposure to catastrophe losses is significantly positively associated with the market's response to earnings reports, even after controlling for uncertainty due to noise in earnings. This implies that during periods of high uncertainty, investors find earnings information more useful in assessing the future prospects of the firm. Copyright Blackwell Publishers Ltd 2002.
Year of publication: |
2002
|
---|---|
Authors: | Christensen, Theodore E. |
Published in: |
Journal of Business Finance & Accounting. - Wiley Blackwell, ISSN 0306-686X. - Vol. 29.2002, 1&2, p. 223-255
|
Publisher: |
Wiley Blackwell |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Black, Dirk E., (2012)
-
The Timing of Quarterly ‘Pro Forma’ Earnings Announcements
Brown, Nerissa C., (2012)
-
Investor Sentiment and Pro Forma Earnings Disclosures
BROWN, NERISSA C., (2012)
- More ...