Numerous articles over the past few decades have documented a consistent relationship between earnings surprises and subsequent stock price performance. [See, for example, Ball and Brown (1968), Rendleman, Jones, and Latane (1982), Foster, Olsen, and Shevlin (1984), and Bernard and Thomas...

This paper addresses the issue of whether investors produce more information on firms that have listed stock options than on similar firms that do not have options and, if so, whether this additional information translates into a smaller stock-price reaction to releases of public information...