We propose and test a catering theory of earnings guidance. Managers cater to reference point dependent investor preferences by issuing excessively optimistic earnings forecasts if investors' stock returns since purchase are comparably low and vice versa. As predicted by our model, earnings...

This paper examines the association between insider trading prior to quarterly earnings announcements and the magnitude of the post-earnings announcement drift (PEAD). We conjecture and find that insider trades reflect insiders’ private information about the persistence of earnings news. Thus,...

The earnings-return relation was subject of numerous studies since the first study of this relation conducted by Ball and Brown in 1968. These studies are relatively rare in transition economies due to specific economic environment and less developed capital markets. Despite the differences in...

We examine the relationship between analysts' stock recommendations and cash flow forecasts, and whether these recommendations and cash flow forecasts provide investors with useful information to identify mispriced securities. In doing so, the paper contributes to the ongoing debate regarding...

Capital markets appreciate stability. It means that companies reporting smooth earnings patterns tend to be priced relatively high. However, the empirical issue is whether such valuation premiums for earnings smoothness are justified. We examine the relationships between past five-year earnings...

Capital markets appreciate stability. It means that companies reporting smooth earnings patterns tend to be priced relatively high. However, the empirical issue is whether such valuation premiums for earnings smoothness are justified. We examine the relationships between past five-year earnings...

We present evidence of a predictable drift in stock prices before the earnings announcements of firms that announce their earnings later than other firms in their industry. We form portfolios based on the returns of later announcers that are implied by the abnormal returns of earlier announcers...