We show that the vast majority of investors ignore value-relevant accruals information when it is first released, but that investors who initiate trades of at least 5,000 shares tend to transact in the proper direction. These investors trade on accruals information only when the...

This paper investigates the relationship among trading volume around earnings announcements, earnings forecast errors, and subsequent returns. Prior research finds a positive relation between earnings announcement period trading volume and subsequent returns (the high-volume return premium) and...

Prior research suggests that some investors may hold earnings expectations that are biased toward seasonal random walk (SRW) predictions. We provide direct evidence that the net buying activity of small (large) traders around earnings announcements is significantly positively associated with SRW...

The persistence of the post-earnings announcement drift leads many to believe that trading barriers prevent knowledgeable investors from eliminating it. For example, Bhushan (1994) contends that sophisticated investors quickly drive prices to within trading costs of efficient values. We examine...

The Securities and Exchange Commission (SEC) has mandated new disclosure requirements in Form 8-K, which became effective on August 23, 2004. The SEC expanded the list of items that have to be reported and accelerated the timeliness of these reports. This study examines the market reactions to...

Theory offers three main determinants of informationally driven trading volume at earnings announcements: pre-announcement difference in private information precision, belief divergence or differential interpretation, and signal strength. In this paper, we empirically test which theoretical...

The Securities and Exchange Commission (SEC) reviews companies’ mandatory filings and issues comment letters to ensure compliance with applicable financial reporting requirements. We explore the nature, determinants, and consequences of SEC comment letters that refer to information disclosed...

A long-standing literature documents the existence of intra-industry capital market co-movements around earnings releases, yet the dynamics of these information transfers remain largely unexplored. We provide evidence on both the sources and the channels of information transfers by separating...

A fundamental property of accrual accounting is to smooth temporary timing fluctuations in operating cash flows, indicating an inherent negative correlation between accruals and cash flows. We show that the overall correlation between accruals and cash flows has dramatically declined in...

A fundamental property of accrual accounting is to smooth temporary timing fluctuations in operating cash flows, indicating an inherent negative correlation between accruals and cash flows. We show that the overall correlation between accruals and cash flows has dramatically declined in...