The Impact of Accounting Disclosures and the Regulatory Environment on the Information Content of Earnings Announcements

Abstract

Abstract: We investigate how accounting standards and the regulatory environment influence the usefulness of accounting information. Prior research finds no market reaction to earnings announcements in Mexico. However, new regulations require firms’ compliance with a governance code and mandate electronic quarterly reporting. Additionally, Mexican accounting standards have converged toward IFRS. We hypothesize the market reacts to earnings announcements following implementation of these improvements in the reporting environment. For good news earnings announcements we find no abnormal returns, but for bad news earnings announcements we find abnormal returns on average and across most share classes. We find abnormal volume around both good and bad news earnings announcements for the market as a whole and across all share classes. Overall, our findings suggest the information content of earnings announcements has increased in the new reporting environment.

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Cite this paper

@inproceedings{Eiler2014TheIO, title={The Impact of Accounting Disclosures and the Regulatory Environment on the Information Content of Earnings Announcements}, author={Lisa A. Eiler and Jos{\'e} M. Miranda-L{\'o}pez and Isho Tama-Sweet and Rashad Abdel-khalik and Roger A. Graham and Dave Guenther and Leslie B. Fletcher and Hsiao-Tang Hsu and Steve Matsunaga and Timothy Shields}, year={2014} }