Cook and Hahn (1988) argue that discount-rate-change announcements were used by the Federal Reserve to signal market participants about movements in the federal funds rate throughout the 1973-79 federal funds rate targeting period. However, Roley and Troll (1984) and Smirlock and Yawitz (1985)...

Discount rate changes always receive considerable attention in financial markets and a bulk of empirical papers shows that asset markets react to them. However, among researchers, there is no consensus yet about why markets respond to such changes. This paper analyses this issue for the...

Many econophysics applications have modeled financial systems as if they were pure physical systems devoid of human limitations and errors. On the other hand, traditional financial theory has ignored limits that physics would impose on human interactions, communications, and computational...

This study examines the extent to which analyst recommendations were useful in identifying earnings surprises during the pre- and post- Regulation FD periods. A comparative analysis of the association between recommendation revisions and subsequent earnings surprises suggests a significant...

This paper examines information processing skills of institutional investors after earnings releases. If institutions can correctly process earnings signals, their trades should push the price towards the fundamental value. In contrast, if institutions mechanically trade in the news direction,...

Do insiders trade on private information about earnings? We address this question exploiting the discontinuity in the term structure of option prices around the announcement date, to obtain a daily and forward-looking measure of the informativeness of the next earnings announcement. This measure...

This paper examines how low financial reporting frequency affects investors' reliance on alternative sources of earnings information. We find that the returns of semi-annual earnings announcers (i.e. low reporting frequency stocks, “LRF”) are almost twice as sensitive to the earnings...

We examine whether financial analysts—sophisticated market participants—are subject to limited attention. We find that when analysts have another firm in their coverage portfolio announcing earnings on the same day as the sample firm (a “concurrent announcement”), they are less likely to...

We examine how supplier-firm shareholders respond to the earnings announcements of their major customers to test the moderated confidence hypothesis, which predicts overreaction to imprecise signals. In our setting, the moderated confidence hypothesis predicts that supplier shareholders will...