Are Investors Influenced by the Order of Information in Earnings Press Releases?

• Cheng, Lin 
• Roulstone, Darren T. 
• Van Buskirk, Andrew 

Indexed by

SSCI FT ABDC-A*

Abstract

We　examine　how　the　ordering　of　information　within　quarterly　earnings　announcements　influences　investor　response　to　those　announcements.　Specifically,　we　examine　whether　earlier　discussion　of　earnings　information,　and　earlier　discussion　of　qualitatively　positive　or　negative　information,　is　associated　with　stronger　responses　to　that　information.　Controlling　for　the　linguistic　content　of　the　earnings　announcement,　we　find　a　positive　relation　between　investor　response　to　information　and　the　prioritization　of　that　information　in　the　earnings　announcement.　We　find　no　evidence　of　investor　over-reaction　and,　to　the　contrary,　find　some　evidence　that　investors　under-react　to　prioritized　information.　Our　evidence,　in　conjunction　with　experimental　evidence　in　Elliott　(2006),　suggests　that　information　placement　influences　investors＇　responses.　However,　unlike　the　experimental　evidence　in　Elliott　(2006),　our　archival　results　suggest　that　investor　response　to　information　placement　is　warranted,　rather　than　the　result　of　an　unintentional　cognitive　effect.

Keyword

• earnings release
• disclosure
• order of information
• under-reaction

Author Community

[Cheng, Lin] China Europe Int Business Sch, Dept Finance & Accounting, Shanghai, Peoples R China

[Roulstone, Darren T.; Van Buskirk, Andrew] Ohio State Univ, Fisher Coll Business, Dept Accounting & Management Informat Syst, Columbus, OH 43210 USA

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