Abstract
This study measures the effect of financial reporting on the prices and volumes traded of banks’ outstanding stocks around the disclosure of interim financial information, which is a critical issue in a bank strategy, its management and corporate governance as a whole. We investigate whether earning press releases are relevant for driving investor decisions by using a multi-model event study on a sample of 674 press releases disclosed during the period 2010–2017 from the 28 Global Systemically Important Banks (G-SIBs). Our results show a negative statistically significant impact on stock prices and trading volumes in the very next days following the publication date of a press release. This calls for a reflection on the need to regulate earnings press release contents and propose a standardized framework of disclosure. The study extends a multi-dimensional insight for various stakeholders and contributes to the ongoing debate of financial disclosure in banking institutions.
Notes
Although the accounting standards may differ from one jurisdiction to another (eg. European Countries and Japan follow IFRS accounting standards; United States adopts US Generally Accepted Accounting Principles; China has its own principles), all the banks included in the sample produce IFRS-compliant financial statements (in particular for China this is as a result of their dual listings in Hong Kong and other international markets, https://www.ifrs.org/use-around-the-world/use-of-ifrs-standards-by-jurisdiction/china/).
Except for the correlation between the ratios equity/TA and Tier 1 ratio (which is − 0.282).
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We thank Nicola Cucari, Francesco Paolone and Muhammad Ghufran for their excellent research assistance.
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Lagasio, V., Brogi, M. Market reaction to banks’ interim press releases: an event study analysis. J Manag Gov 25, 95–119 (2021). https://doi.org/10.1007/s10997-020-09516-y
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DOI: https://doi.org/10.1007/s10997-020-09516-y