Intra-industry information transfer: evidence from accumulated confirmatory earnings news by peers

This study investigates the role of accumulated information disclosed by peer firms in the same industry in driving stock market responses to earnings announcements. Specifically, we examine the stock market’s reaction when more industry peer firms have announced unexpected earnings in the same direction. We find that the stock market’s response is stronger when a company announces unexpected earnings that confirm the accumulated earnings news previously announced by industry peers. Further analyses reveal that our finding is more pronounced when there is greater firm-level information uncertainty and when earnings are announced early in a quarter.