The transmission of corporate financial information across national borders and equity market linkages

Michael Arthur FIRTH

    Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

    11 Citations (Scopus)

    Abstract

    Although intra-industry earnings information transfers have been documented within individual nations, little or no attention has been given to examining whether these transfers also exist across national boundaries. This study sets out to investigate the issue by analyzing the abnormal stock market returns of British firms at the time of annual earnings announcements by U.S. corporations and the returns of U.S. firms at the time of profit announcements by British companies. Information transfers are also tested by examining whether earnings surprises of companies in one country are related to revisions in investment analysts' consensus profit forecasts of non-reporting firms in the other country. The accuracies of revisions in consensus earnings estimates an investigated. Evidence of transnational information transfers from the United States to Britain is found and the degree and level of the signal is related to various firm and industry characteristics including correlations in reported profits.
    Original languageEnglish
    Pages (from-to)309-337
    Number of pages29
    JournalReview of Accounting Studies
    Volume1
    Issue number4
    DOIs
    Publication statusPublished - 1 Dec 1996

    Fingerprint

    Equity markets
    Linkage
    Financial information
    Information transfer
    Profit
    Industry characteristics
    Earnings announcements
    Announcement
    Earnings surprises
    Analysts
    Firm characteristics
    Industry
    Stock market returns

    Keywords

    • Spillover effects

    Cite this

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    abstract = "Although intra-industry earnings information transfers have been documented within individual nations, little or no attention has been given to examining whether these transfers also exist across national boundaries. This study sets out to investigate the issue by analyzing the abnormal stock market returns of British firms at the time of annual earnings announcements by U.S. corporations and the returns of U.S. firms at the time of profit announcements by British companies. Information transfers are also tested by examining whether earnings surprises of companies in one country are related to revisions in investment analysts' consensus profit forecasts of non-reporting firms in the other country. The accuracies of revisions in consensus earnings estimates an investigated. Evidence of transnational information transfers from the United States to Britain is found and the degree and level of the signal is related to various firm and industry characteristics including correlations in reported profits.",
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    The transmission of corporate financial information across national borders and equity market linkages. / FIRTH, Michael Arthur.

    In: Review of Accounting Studies, Vol. 1, No. 4, 01.12.1996, p. 309-337.

    Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

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