Seminar (Dept. of Accounting)

Theme：The Effect of Financial Statement Comparability on Price Discovery

Speaker：Lingfeng Geng, Doctoral candidate, Cornell University

Time：2021-12-08 12:00

Address：Tencent Meeting

Language：English

Venue：Tencent Meeting https://meeting.tencent.com/dm/7718VnAmDQZz 

Meeting ID：886-732-757

Password：1208

ABSTRACT:

I investigate the effect of financial statement comparability on the price discovery process. Using an input-based measure of comparability and the setting of earnings announcements, I document greater short-window price reactions to earnings news when firms have higher comparability in their financial statements. The new information is impounded into prices more quickly, and there is less post-earnings-announcement drift. Meanwhile, the relative order of earnings announcements does not influence the relation between comparability and price discovery. When comparability is high, investors are more likely to search for peer information before and during earnings announcements, and there is a higher abnormal trading volume around earnings announcements. Other market participants, including short sellers, are also influenced by comparability. Taken together, this study provides empirical evidence that financial statement comparability reduces information processing costs and improves the speed of price discovery.

SHORT BIOGRAPHY:

Lingfeng Geng is a doctoral candidate in Management (Concentration in Accounting) of Samuel C. Johnson Graduate School of Management, Cornell University. His research areas of interest include information processing costs, corporate disclosure, capital Markets, ESG.