Among patients with unstable angina or myocardial infarction without ST-segment elevation, prasugrel did not significantly reduce the frequency of the primary end point, as compared with clopidogrel, and similar risks of bleeding were observed. (Funded by Eli Lilly and Daiichi Sankyo; TRILOGY ACS ClinicalTrials.gov number, NCT00699998.).

We examine the influence of investor sentiment on managers’ discretionary disclosure of “pro forma” (adjusted) earnings metrics in earnings press releases. We find that managers’ propensity to disclose an adjusted earnings metric (especially one that exceeds the GAAP earnings number) increases with the level of investor sentiment. Furthermore, our analyses suggest that, as investor sentiment increases, managers: (1) exclude higher levels of both recurring and nonrecurring expenses in calculating the pro forma earnings number and (2) emphasize the pro forma figure by placing it more prominently within the earnings press release. Additional analyses indicate that the association between investor sentiment and managers’ pro forma disclosure decisions at least partly reflects opportunistic motives. Finally, we find that managers’ own sentiment‐driven expectations also play a role in their pro forma disclosure decisions.

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. This Draft: March 2007 † We thank Mark Chen, Pedro Matos, Tong Yao, and workshop participants at the University of Southern California and University of Texas -Dallas for helpful comments and suggestions. We thank Thomson Financial for providing the I/B/E/S analyst forecast and recommendations data. All errors are our own. Terms of use: Documents in EconStor mayElectronic copy of this paper is available at: http://ssrn.com/abstract=972731 Analyst Recommendations, Mutual Fund Herding, and Overreaction in Stock Prices AbstractThis paper documents the tendency of mutual fund managers to follow analyst recommendation revisions when they trade stocks, and the impact of analyst revisioninduced mutual fund "herds" on stock prices. We find that mutual fund herds follow consensus revisions in analyst recommendations, controlling for common investment signals that affect both analyst revisions and mutual fund trading. Consensus upgrades result in herds of funds buying a stock, while consensus downgrades result in even bigger herds of funds selling.Our most important finding is that mutual fund herding impacts stock prices to a much larger degree during our sample period (1994 to 2003) than during prior-studied periods. Further, we find the first evidence that mutual funds appear to overreact when they herd in their trades-stocks heavily bought by herds tend to underperform their size, book-tomarket, and momentum cohorts during the following year, while stocks heavily sold outperform. These reversal patterns are even stronger when herds of mutual funds (especially funds with poor performance records) follow analyst recommendation revisions. An investment strategy that accounts for the direction of both analyst revisions and mutual fund herding generates a return (adjusted for size, book-to-market, and momentum) exceeding six percent during the following year. Our results remain robust when we condition fund herding on analyst earnings forecast revisions instead of recommendation revisions. Overall, our study finds that the interaction between sell-side analysts and mutual fund managers plays an important role in setting prices in equity markets.The efficient markets paradigm endures as a central focus of empirical tests by academic researchers, with many recent papers providing strong evidence against efficiency in U.S. equity markets. For instance, several researchers examine patterns in stock returns to find evidence suggestive of large groups of investors exhibi...

We examine the effect of intangible investment on earnings noncommonality, defined as the extent to which a firm's earnings performance is determined by firm-specific factors versus market and industry factors. Such insight is important in determining the appropriate weighting of these factors when forecasting a firm's earnings. For a sample of US firms over the 1980-2006 period, we find that earnings noncommonality is positively associated with intangible asset intensity. This finding is consistent with the resource-based view of the firm, which posits that intangible investments allow firms to differentiate themselves economically from their rivals. We also find that separable recognized intangibles contribute more to earnings noncommonality than do either goodwill or R&D, perhaps because separable recognized intangibles are more likely to arise from contractual or legal rights and thus are less susceptible to expropriation by rival firms. Finally, we find that the positive impact of R&D on earnings noncommonality is significantly greater for those industries where patents and other legal mechanisms are most effective in protecting R&D. This result suggests that the success of intangible investment as a differentiation strategy depends largely on the effectiveness of mechanisms used to protect intangible investments from expropriation.

While some prior studies suggest that the timing of earnings announcements may reflect management's attempt to better inform investors, other studies suggest that managers opportunistically time their earnings releases in an effort to alter investors’ perceptions of firm performance. However, there is limited empirical evidence on the relation between earnings announcement timing and the manipulation of reported earnings. We extend this research by examining the timing of quarterly earnings announcements that contain an adjusted (‘pro forma’) earnings measure and whether managers’ behavior is more consistent with opportunistic or information‐related motives. We find that, on average, managers accelerate the timing of earnings announcements in quarters in which they disclose an adjusted earnings metric within the earnings press release relative to quarters in which they do not. In addition, we find that the acceleration of the earnings announcement increases with the level of managers’ exclusions of recurring expenses and their use of less transparent reconciliation formats. Consistent with managerial opportunism, we find that the recurring item exclusions used to calculate pro forma earnings in accelerated earnings announcements are of relatively lower quality and are more predictive of lower future earnings. We also find that investors fail to fully unravel the low‐quality nature of the recurring item exclusions used to calculate pro forma earnings in these accelerated announcements and that this failure is attenuated by managers’ use of less transparent reconciliation formats. Taken together, our results suggest that the acceleration of pro forma earnings news is at least partially attributable to managerial opportunism.