Quarterly earnings announcements and market risk adjustments

Article Abstract:

Empirical evidence indicates that beta shifts occur during corporate earnings announcements. This was gleaned from the results of an analysis of two-day earnings announcements by a sample of 195 US firms. Specifically, there was a statistically significant upward trend in beta shift at the time of the announcements, and the risk per unit of time increased during events with predictable timing. Beta shifts were also found to be inversely related to firm size, with smaller firms having higher beta shifts at the time of earnings announcements.

Evaluation, Profits, Securities, Corporate profits

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Discussion of 'Laboratory Evidence on How Managers Intuitively Value Real Options.' (response to Sydney D. Howell and Axel J. Jagle in this issue, p. 915)

Article Abstract:

A discussion regarding the inadequacy of a study about managers valuation of real options is presented to expound on the need of using a more theoretically grounded, functional and comprehensive model of valuing real options. The discussion also aimed at determining the accurate price investment options of managers based on the actual situation. It also questioned the validity of the previous study by underscoring the importance of follow-on options in determining how managers actually value growth options.

Management Theory & Techniques, Practice, Management, Executives, Management research

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