FIRST COME FIRST DISSERVED

Joseph Cerniglia and Joshua Livnat

This study investigates whether stock market reactions to earnings information of firms that release their earnings close to quarter-end (Early) are systematically different from their industry peers which report later during the quarter (Late). Unexpectedly, we find that immediate market reactions to early reporters are weaker than those to late or middle reporters. We also find that stock market returns subsequent to the earnings announcements are stronger for positive earnings surprises of early reporters than late reporters, indicating that the market systematically underreacts to the positive surprises of early reporters. These results have implications for investors who can use this systematic underreaction in their trading strategies and academics who can understand better how market participants gather and process earnings information.