Evidence on the incremental information content of additional firm disclosures made concurrently with earnings

Article Abstract:

The incremental information content of additional firm disclosures that are released concurrently with annual earnings is examined. Incremental information content is defined as content beyond the information contained in the earnings announcement, including components of earnings, operating data and dividend announcements. Data were drawn from the Dow Jones News Retrieval Service for all disclosures made by sample firms for the day and the day after earnings are announced. By measuring information content as a statistically significant association between categorical and continuous disclosure variables and stock returns, it is shown that there is incremental information content for certain earnings components. A discussion of the results by Lawrence D. Brown is included.

Profit, Profits, Financial statements

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Firm size effects and the association between excess returns and LIFO tax savings

Article Abstract:

Three hundred and eleven New York Stock Exchange (NYSE) firms began using LIFO between 1973-1980. A study by Biddle and Lindahl (B-L) (1982) indicated a positive market reaction to the LIFO adoptions. However, several methodological concerns were raised by the B-L study. Using data obtained from CRSP (returns), Compustat (earnings and firm size), annual reports, and 10-K footnote disclosures, it is indicated that B-L's findings may be due to the confounding effects of firm size.

Analysis, Prices and rates, Stocks, Taxation, Stock prices

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Analyst forecast errors and stock price behavior near the earnings announcement dates of LIFO adopters

Article Abstract:

Research examines investor reaction to firms that adopted a last-in first-out inventory (LIFO) inventory costing method between June 1974 and May 1975. LIFO provided the company with a reduction of taxes. Firms that adopted LIFO had stock returns that were negative and significantly lower than firms not using LIFO. Results suggest that earnings for firms using LIFO were systematically overestimated by analysts.

Stockholders, Beliefs, opinions and attitudes, Inventory control

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