Stocks that report unexpected earnings surprises seem to provide superior performances relative to the market.

Question

Quizplus · Accepted Answer

Usually positive earnings reports have no effect. However, an exception to this rule may relate to truly unexpected earnings announcements. If they are very positive, the stock may go up for a number of days after the announcement, and thus provide a superior investment opportunity. The opposite would be true of a totally unexpected negative announcement.

Stocks That Report Unexpected Earnings Surprises Seem to Provide Superior