Stock price response to new‐CEO earnings news
Geertsema, Paul G Lont, David H Lu, Helen
Geertsema, Paul G
Lont, David H
Lu, Helen
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Publication Type
Journal article with impact factor
Editor
Supervisor
Publication Year
2018-09
Journal
Accounting and Finance
Book
Publication Volume
58
Publication Issue
3
Publication Begin page
849
Publication End page
883
Publication Number of pages
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Abstract
Abstract New‐ CEO earnings news exhibits asymmetric effects on stock prices. Stock prices rise more on good earnings news announced by firms with new CEO s compared with those with established CEO s. By contrast, stock prices tend to fall by a smaller amount on bad earnings news for new CEO s. Both the new‐ CEO quality effect and the new‐ CEO honeymoon effect are more pronounced for CEO s appointed during challenging situations. The new‐ CEO quality effect is stronger for firms followed by fewer analysts, while the honeymoon effect is stronger for firms followed by more analysts – illustrating the importance of a transparent information environment.
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Keywords
3501 Accounting, Auditing and Accountability, 3502 Banking, Finance and Investment, 35 Commerce, Management, Tourism and Services, 3507 Strategy, Management and Organisational Behaviour