In research examining market efficiency, Bernard and Thomas examined quarterly earnings announcements. Discuss how Bernard and Thomas test the issue of market efficiency and the results of their research
Bernard and Thomas examine market efficiency by forming 10 portfolios each quarter over the period 1974 to 1986 based on the size of firms' standardized unexpected earnings (SUE). They then calculate the abnormal returns for each portfolio for the 60 days prior to and including the release of earnings. Portfolios made up of the largest SUEs increased during this period, while portfolios made up of the lowest SUEs decreased. However, post-announcement abnormal returns followed this same trend, suggesting that security participants do not immediately react to the information in earnings announcements.
You might also like to view...
The ________ details how the business expects to go from the beginning cash balance to the desired ending cash balance.
A) capital expenditures budget B) budgeted income statement C) cash flow statement D) cash budget
Which of the following is not an element in Munro-Fraser’s (1958) five-fold system for compiling person specifications:
a. impact on others b. acquired qualifications c. innate abilities d. personal circumstances
What is the name for the bank market for deposits and loans that is denominated in a currency different to the currency of the country in which a bank is operating?
A) internal currency market B) foreign exchange market C) external currency market D) interbank market
Miguel has a 50% interest in partnership capital, profits, and losses. The basis for his partnership interest is $50,000. The partners share the economic risk of loss from recourse liabilities in the same way they share partnership losses. Miguel receives a distribution of land that has an FMV of $40,000 and an adjusted basis of $30,000. The land is subject to a $15,000 liability, which Miguel
assumes. His basis in the partnership interest following the land distribution is A) $12,500. B) $20,000. C) $27,500. D) $35,000.