Document Type

Article

Publication Date

1-1-2007

Publication Title

Financial Decisions

First Page

1

Last Page

15

Disciplines

Accounting | Finance and Financial Management

Abstract

A post-earnings announcement drift associated with the market reaction to analyst forecasts errors remains a puzzle. This study suggests that whispers help to explain part of the puzzle. The study examines the market reaction to whispers and analysts in bull and bear markets, and finds that investors listen to whispers in the bull market and whispers help explain the post-announcement drift. In a bear market, reaction to whispers is significantly positive prior to announcement despite a down market, indicating optimism by investors who follow whispers. However, in the bear market, both whispers and analysts contribute to the post-announcement drift.

Comments

Copyright © 2007 Financial Decisions Association.

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