Predictors of the Degree of Positive Earnings Surprises

Abraham, Rebecca; Harrington, Charlie W.

doi:10.4236/ojacct.2016.53004

Cited by 5 publications

(2 citation statements)

References 34 publications

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“…Positive earnings or good news happen when actual earnings exceed analyst estimates. Abraham and Harrington (2016) identified forecasters with positive earnings surprises -sales whose growth may be related to continued earnings, cash flow, type of industry and analyst coverage. Positive earnings have the potential to increase investor expectations for the company's future profitability.…”

Section: Positive Earnings Surprisementioning

confidence: 99%

Earnings Surprises and Stock Price Reactions of Quoted Companies in Nigeria

Ekpe

Obasi

Abdullahi

et al. 2020

IJFR

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This study focuses on examining the relationship between stock prices and earnings surprises in quoted companies of Nigeria. This study applied a longitudinal research design which studies the effect of earnings surprises on stock prices using panel data. A sample of 64 companies was chosen to study in all sectors of the Nigerian Stock Exchange. The research data were obtained from secondary sources of the annual reports for the selected companies covering the period from 2013 to 2017. The measurement for earnings surprises used in the study is the residual or unexplained component of earnings persistence model commonly referred to as first-order autoregressive AR (1) regression of reported earnings. Were, the data analysis was carried out by regression using the generalised least squares technique. The regression results for positive earnings surprise shows that share prices react negatively to positive surprises with a coefficient of (-2.4109) in tandem with the return news hypothesis which suggests that positive earnings news results in a negative stock-price reaction. The negative earnings surprise results show that stock prices react positively to negative earnings surprises with a positive coefficient of (0.1136). This is in line with the premise of return news, which indicates that negative earnings news leads to a positive reaction to the share price. The study recommends that there is a need to regulate the stock market to improve the level of market efficiency in stock markets. This will improve the rate at which earnings news will be reserved at stock prices. Secondly, there is a need to improve investor confidence in the disclosed profits made by companies.

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Section: Positive Earnings Surprisementioning

confidence: 99%

Earnings Surprises and Stock Price Reactions of Quoted Companies in Nigeria

Ekpe

Obasi

Abdullahi

et al. 2020

IJFR

View full text Add to dashboard Cite

show abstract

“…Theories of investor behavior have determined that such subjective information captures the imagination of investors who are more likely to retain it and make investment decisions based upon it ( [14]). Specifically, [15] observed that positive earnings surprises (actual earnings exceeding analysts' forecasts of earnings) were realized for industries with rich, colorful, anecdote-filled histories which complemented statistical reports. [16] observed significant explanation of earnings surprises by pharmaceutical companies who launched new drugs with stories of the firm and its researchers.…”

Section: The Impact Of News On Oil Pricesmentioning

confidence: 99%

Determinants of Oil Futures Prices

Abraham¹,

Harrington²

2016

TEL

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This study is directed at predicting the determinants of oil futures prices. We evaluate commodity pricing with oil occupying a special position due to highly inelastic demand. Given the sudden fall in oil prices, there is theoretical and practical interest in identifying the determinants of falling oil prices. While the popular press dwells on oversupply in production as the principal determinant of price declines, we examine additional predictors including call option sales and put option purchases along with the Canadian dollar-US dollar exchange rate and news of future oil prices. Intraday call and put options on NYMEX oil futures were examined. Call and put option prices of 1 -7 month-maturities, along with exchange rates, the supply of oil and news of oil prices were regressed on oil futures prices. A trading strategy was tested based on the thesis that in a period of price declines, options traders seek to profit by selling call options and purchasing put options. While oversupply of oil was the most important determinant of oil prices, trader speculation through put buying and call selling exacerbated the decline in oil prices. Call and put option prices explained oil futures prices for options of 1 -4 month maturities. The supply of oil was significant in predicting oil futures prices in all future time periods. This was followed by the Canadian dollar-US dollar exchange rate which was significant in predicting oil prices 1, 2, 3 and 6 months into the future. Finally, news of forthcoming events affecting oil prices predicted oil futures prices 3, 4, 5, 6 and 7 months in advance.

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