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Financial statement comparability; corporate news; firm-specific earnings; earnings response coefficient; information content of earnings.
This study investigates the role of financial statement comparability in the stock price sensitivity to firm-specific earnings news. Results suggest that information content of earnings is greater for firms with higher comparability, suggesting that comparability contributes to information usefulness for investors in equity valuation decisions. Further support indicates that comparability enhances usefulness through increased response to positive earnings surprises. This influence is pronounced for the earnings news of small firms, high volatility firms, growth/value firms, and firms with low return on assets, suggesting that comparability is more informative for more speculative stocks.
Journal of Accounting and Finance
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