To test whether accounting information is useful,researchers such as Ball and Brown tested whether share prices responded to:
A) Expected earnings announcements
B) Forecast earnings announcements
C) Unexpected earnings announcements
D) All of the given options are correct.

Question

Quizplus · Accepted Answer

Ball and Brown's study aimed to test whether accounting information is useful to investors by examining whether unexpected earnings announcements affected share prices. The reasoning is that if unexpected earnings announcements affect share prices, it suggests that investors are using accounting information to make investment decisions. The study did not examine expected or forecast earnings announcements. Therefore, the correct answer is C.

To Test Whether Accounting Information Is Useful,researchers Such as Ball