Stock price response to new-CEO earnings news
Geertsema, Paul Lont, David H. Lu, Helen
Geertsema, Paul
Lont, David H.
Lu, Helen
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Publication Type
Journal article with impact factor
Editor
Supervisor
Publication Year
2018
Journal
Accounting & Finance
Book
Publication Volume
58
Publication Issue
3
Publication Begin page
849
Publication End page
883
Publication Number of pages
Collections
Abstract
New-CEO earnings news exhibits asymmetric effects on stock prices. Stock prices rise more on good earnings news announced by firms with new CEOs compared with those with established CEOs. By contrast, stock prices tend to fall by a smaller amount on bad earnings news for new CEOs. Both the new-CEO quality effect and the new-CEO honeymoon effect are more pronounced for CEOs 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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Organizational Units
Journal Issue
Keywords
CEO Turnover, Unexpected Earnings, Earnings Response Coefficient, Meet and Beat Premium, Information Environment