Part II: Theory: Earnings Announcements and Earnings Surprises

The chapters in this part cover everything you ever wanted to know about earnings announcements and earnings surprises. Chapter 2 discusses what earnings announcements are, why they’re important, and some of their most important features. Chapter 3 defines what an earnings surprise is and discusses why even the definition/calculation of an earnings surprise is so rife with ambiguities. Chapter 4 presents empirical evidence of what earnings surprises look like, including examples of individual companies, as well as examples of large sample sizes spanning 25 years of data on publicly traded companies. We then show you how the pattern of earnings surprises has changed over time.

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