Finance professors Dr. Christine Jiang and Dr. Thomas McInish, along with Dr. Tanakorn Likitapiwat, a recent graduate of the Finance doctoral program and a faculty member at Chulalongkorn University in Thailand, have authored a study, "Information Content of Earnings Announcements: Evidence from After Hours Trading," that is slated to appear in the A+ rated Journal of Financial and Quantitative Analysis (JFQA).
In the United States, investors can trade on exchanges during regular hours (9:30 a.m. to 4 p.m.) or in sessions outside of these hours. Almost all earnings announcements by U.S. firms now occur during the before- and after-hours sessions. In their study, Jiang, McInish and Likitapiwat show that a significant portion of the price change resulting from the announcements occurs immediately after the earnings releases rather than during regular trading. The study provides evidence that firms prefer to make earnings announcements during the before and after sessions because trading in those sessions is dominated by knowledgeable traders whose trades are better able to convey information to the general public.