Can You Hear Me Now? Earnings Surprises and Investor Distraction in the Hospitality Industry

Other Titles
Abstract
One explanation for the phenomenon of stock price drift involves the limitations of investors’ attention span. This study finds that investors often under-react to earnings announcements when numerous firms release their results on the same day. Particularly in the case of earnings surprises, however, stock prices gradually move in the expected direction over time, even if the initial reaction is muted. This slow adjustment appears to reflect investors belatedly processing the announcement information and incorporating that into the stock prices. Thus, for hospitality stocks at least, market efficiency is delayed due to humans’ slow response to a heavy information load. This under-reaction has the longer-term effect that stocks whose earnings are announced on days with the highest information load also experience greater post-earnings-announcement drift, as their prices make up for the initial under-reaction by moving towards fair value over the subsequent month. One implication is that hospitality investors who are “late to the party” by not making a move on the earnings announcement day can still anticipate further price changes as the stock price moves to its fair value.
Journal / Series
Volume & Issue
Description
Sponsorship
Date Issued
2013-11-01
Publisher
Keywords
hospitality; stock prices; stock earnings; earnings announcements
Location
Effective Date
Expiration Date
Sector
Employer
Union
Union Local
NAICS
Number of Workers
Committee Chair
Committee Co-Chair
Committee Member
Degree Discipline
Degree Name
Degree Level
Related Version
Related DOI
Related To
Related Part
Based on Related Item
Has Other Format(s)
Part of Related Item
Related To
Related Publication(s)
Link(s) to Related Publication(s)
References
Link(s) to Reference(s)
Previously Published As
Government Document
ISBN
ISMN
ISSN
Other Identifiers
Rights
Required Publisher Statement: © Cornell University. This report may not be reproduced or distributed without the express permission of the publisher
Rights URI
Types
article
Accessibility Feature
Accessibility Hazard
Accessibility Summary
Link(s) to Catalog Record