TY - JOUR
T1 - The effect of industry homogeneity on the magnitude of post-earnings announcement drift
T2 - Evidence from Korea
AU - Shin, Heejeong
AU - Kim, Su In
AU - Park, Sorah
AU - Shin, Hyejeong
N1 - Publisher Copyright:
© Asian Academy of Management and Penerbit Universiti Sains Malaysia, 2019.
PY - 2019
Y1 - 2019
N2 - We examine the relationship between industry homogeneity and the magnitude of post-earnings announcement drift (hereafter, PEAD). Given that firms with more homogeneous operating cost structure are conducive to spillover of knowledge among investors, we expect that firms in highly homogenous industries have relatively low magnitude of PEAD. Using firms listed on the Korean Stock Exchange, we find that the magnitude of PEAD is negatively related to industry homogeneity, indicating that investors are more efficient for firms in a highly homogenous industry in which information is likely to be referred to peer firms. In addition, we find that the effect of industry homogeneity on the magnitude of PEAD is robust even after controlling to the effect of industry concentration. Our study contributes to the literature on exploring determinants of PEAD by linking information transfer effect in a homogenous industry to investors’ informational efficiency in capital markets.
AB - We examine the relationship between industry homogeneity and the magnitude of post-earnings announcement drift (hereafter, PEAD). Given that firms with more homogeneous operating cost structure are conducive to spillover of knowledge among investors, we expect that firms in highly homogenous industries have relatively low magnitude of PEAD. Using firms listed on the Korean Stock Exchange, we find that the magnitude of PEAD is negatively related to industry homogeneity, indicating that investors are more efficient for firms in a highly homogenous industry in which information is likely to be referred to peer firms. In addition, we find that the effect of industry homogeneity on the magnitude of PEAD is robust even after controlling to the effect of industry concentration. Our study contributes to the literature on exploring determinants of PEAD by linking information transfer effect in a homogenous industry to investors’ informational efficiency in capital markets.
KW - Industry homogeneity
KW - Information efficiency
KW - Information transfer
KW - Knowledge spillover
KW - Post-earnings announcement drift
UR - http://www.scopus.com/inward/record.url?scp=85073357042&partnerID=8YFLogxK
U2 - 10.21315/aamjaf2019.15.1.5
DO - 10.21315/aamjaf2019.15.1.5
M3 - Article
AN - SCOPUS:85073357042
SN - 1823-4992
VL - 15
SP - 107
EP - 127
JO - Asian Academy of Management Journal of Accounting and Finance
JF - Asian Academy of Management Journal of Accounting and Finance
IS - 1
ER -