What Drives the Increased Informativeness of Earnings Announcements Over Time?

41 Pages Posted: 15 Sep 2004 Last revised: 4 Sep 2008

See all articles by Daniel W. Collins

Daniel W. Collins

University of Iowa - Department of Accounting

Oliver Zhen Li

National University of Singapore (NUS)

Hong Xie

University of Kentucky - Von Allmen School of Accountancy

Date Written: September 1, 2007

Abstract

Landsman and Maydew (2002) document that the information content of earnings announcements has increased over the past three decades, and Francis, Schipper, and Vincent (2002) conclude that expanded concurrent disclosures in firms' earnings announcements, especially the inclusion of detailed income statements, explain this increase. We posit and find that the temporal increase in the intensity of the market's reaction to Street earnings offers a competing explanation for the Landsman and Maydew finding. We also find that expanded concurrent disclosure of GAAP-based information contributes to the temporal increase in the information content of earnings announcements. However, unlike Francis et al., we find that the temporal increase in concurrent balance sheet and cash flow statement information dominates concurrent income statement information once we control for Street earnings.

Keywords: capital markets, earnings announcements, Street earnings, trading volume

JEL Classification: G12, M41, M44, M45

Suggested Citation

Collins, Daniel W. and Li, Oliver Zhen and Xie, Hong, What Drives the Increased Informativeness of Earnings Announcements Over Time? (September 1, 2007). Review of Accounting Studies, Forthcoming, Available at SSRN: https://ssrn.com/abstract=591027 or http://dx.doi.org/10.2139/ssrn.591027

Daniel W. Collins

University of Iowa - Department of Accounting ( email )

108 Pappajohn Business Building
Iowa City, IA 52242-1000
United States
319-335-0912 (Phone)
319-335-1956 (Fax)

Oliver Zhen Li (Contact Author)

National University of Singapore (NUS) ( email )

1E Kent Ridge Road
NUHS Tower Block Level 7
Singapore, 119228
Singapore

Hong Xie

University of Kentucky - Von Allmen School of Accountancy ( email )

Lexington, KY 40506
United States
(859) 257-4648 (Phone)
(859) 257-3654 (Fax)

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