Does the market reaction to former information influence the future voluntary disclosure of earnings forecasts-evidence from the Chinese a-share market

Xian Hua Zhou, Robert Brooks, Gao Cai Chen

Research output: Chapter in Book/Report/Conference proceedingConference PaperResearchpeer-review

Abstract

In the broad, the market reacts to the earnings forecast disclosure in three ways, namely, under reaction, overreaction and expected reaction. Generally, if the market has already overreacted (under reacted) to the disclosed earnings forecast, the company will show a weak (strong) inclination to keep disclosing information. This paper studies companies which are listed on the Shanghai and Shenzhen stock exchange and have issued their earnings forecast during 2004-2006. The result shows that, what is taken in consideration when the manager decides to disclose information is how the stock market responds to the former information. If the management found the market has overreacted to its good news, the inclination for further release should be decreased, similarly if the market has under reacted to its bad news. In a word, the decision to disclose its earnings forecast or not is on the basis of consideration of past market reaction, not only on the basis of the type of news.

Original languageEnglish
Title of host publication2010 International Conference on Management Science and Engineering, ICMSE 2010
Pages1359-1364
Number of pages6
DOIs
Publication statusPublished - 2010
EventInternational Conference on Management Science and Engineering 2010 - Melbourne, Australia
Duration: 24 Nov 201026 Nov 2010
Conference number: 17th

Conference

ConferenceInternational Conference on Management Science and Engineering 2010
Abbreviated titleICMSE 2010
CountryAustralia
CityMelbourne
Period24/11/1026/11/10

Keywords

  • Chinese a-share market
  • Earnings forecast
  • Market reaction
  • Voluntary disclosure

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