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- Title
Do Firms Learn from Pre‐announcement Experience? Evidence from Optimistic Pre‐announcements and Market Responses.
- Authors
Lim, Youngdeok; Oh, Hyung Il
- Abstract
In this study, we examine whether firms learn from pre‐announcement experience by focusing on optimistic pre‐announcements and market responses. Optimistic pre‐announcements are pre‐announced Earnings Per Share (EPS) higher than or equal to actual EPS. Based on organizational learning theory, we hypothesize that firms experiencing negative market responses to positive pre‐announcements (pre‐announced EPS higher than or equal to analysts' consensus) are less likely to make another pre‐announcement during subsequent time periods. Our findings support this hypothesis. For firms making another pre‐announcement, we find that the experience of a negative market response to a positive pre‐announcement is negatively related to making an optimistic pre‐announcement. Taken together, our findings suggest that firms learn from the previous experience of pre‐announcements and the corresponding market responses.
- Subjects
ORGANIZATIONAL learning; EARNINGS per share; RELATIONSHIP marketing
- Publication
Abacus, 2022, Vol 58, Issue 2, p365
- ISSN
0001-3072
- Publication type
Article
- DOI
10.1111/abac.12242