The impact that a firm's earnings releases have on the stock prices of other firms in its industry is examined. For an identifiable sub-set of firms, the results are consistent with a significant information transfer occurring between the earnings release firm and the other firms in its industry. This subset is identified by examining the impact of the release on the stock price of the announcing firm. The magnitude of this impact is more significant for a sample of firms which have a larger percentage of their revenues in the same line of business as the earnings release firm vis-á-vis a sample with a lower percentage of their revenues from the same line of business. Alternative interpretations of the empirical results are also discussed. The research findings have implications for information content and market efficiency research and for research on policy issues associated with disclosure regulation.

Briloff, Company news, Superior insights, Private information

Segment reporting, Disaggregation, Informational content, Insurance industry

Management forecast, EPS, Trading Volume, Informational content

The capital asset pricing model specifies that relative risk is a sufficient descriptor of security risk. This result holds under both the Sharpe-Lintner version, and the more general Black version of the model, where = expected rate of return on asset i, Rf = riskless rate of interest, = expected return on the market portfolio, = expected return on any “zero-beta” asset or portfolio of such assests, and = relative risk of asset i in the market portfolio of assests.

The time-series behavior of the quarterly earnings, sales and expense series of 69 firms over the 1946-74 period is examined. A Box-Jenkins time-series methodology is adopted. Based on inspection of the cross-sectional autocorrelation function, it is concluded that each series has (a) an adjacent quarter-to-quarter component and (b) a seasonal component. One-step-ahead forecasting results reveal that these two components can be successfully modelled at the individual firm level. The use of various quarterly forecasting models in security price analysis is also examined. The results are consistent with the market adjusting for seasonality in quarterly earnings in interpreting each quarter's earnings change.

The article examines several aspects of the relationship between accounting earnings and stock prices. The author discusses the market reaction to accounting changes and whether any non-reported earnings measures have a higher association with stock prices than the reported measure. insurance stocks. The topic of insurance stocks is of added interest to the accounting profession as considerable resources have been devoted to analyzing two issues in the insurance industry, that is, the measurement of underwriting earnings and the measurement of capital gains and losses on marketable equity securities. The article also provides some evidence on the marketable securities issue. One argument against the inclusion of annual capital gains and losses in the income statement, rather than a separate surplus statement, was that the income statement alternative "may be a damaging factor to the orderly functioning of the stock market" and may cause "the stock of the company to decline when it should not." The evidence in this article suggests there is a small likelihood of such consequences.

This paper empirically examines hypothesis from the accounting, manufacturing, and strategy literatures about volume-based, complexity-based, and efficiency-based drivers of manufacturing overhead costs. Cross-sectional data from a questionnaire of thirty-seven facilities of an electronics company are examined. Subject to caveats regarding the cross-sectional tests, strongest empirical association is found for volume-related cost drivers. There is not consistently strong empirical association for complexity- or efficiency-related drivers. Explanations for the limited association for the complexity- and efficiency-related drivers include proxy problems with the complexity and efficiency concepts and problems in developing uniform measures of variables across a broad cross-section of facilities.