The Empirical Study Of The Effect Of Performance Preannouncement To Stock Price

There is a principal-agent relationship between investors and managers of listed companies.The investors have less information than managers and it leads to the phenomenon of asymmetric information.In order to mitigate the phenomenon of information asymmetry,China's Securities Regulatory Commission set up a performance preannouncement system in 1998.The purpose of the performance preannouncement system is to release the risk in advance and slow down the abnormal fluctuation of the stock price when the formal report is disclosed.Does the performance announcement really have information content? And can it cause stock price reactions? What is the effect of unexpected earnings to stock price.? In order to solve these problems,this paper discusses the effect of performance preannouncement to stock price.This paper takes the performance preannouncement of Shanghai and Shenzhen A-share real estate listed companies from 2011 to 2015 as the research samples and divides the performance preannouncement into “good news” and “bad news”.This paper uses the event study method to study effect of different types of performance preannouncement to stock price and to study effect of different types of performance preannouncement to stock price under different market conditions.And this paper uses multiple linear regression analysis to study the effect of unexpected earnings to stock price.According to the results of empirical research,this paper draws the following conclusions:(1)Under the full sample,“good news” can lead to significant positive reaction of stock price and have expected effect and disclosure effect;“bad news” does not cause significant negative reaction of stock price.(2)“good news” has a significant positive reaction of stock price both in the bull market and bear market.There is no significant difference between in the bull market and in bear market.But “bad news” has a significant positive reaction in the bull market and a significant negative reaction in the bear market.There is a significant difference between in the bull market and in bear market.(3)When the performance preannouncement is good news,the unexpected earnings is positively related to the Cumulated Abnormal Return in the time window of [-10,10].The unexpected earnings have a positive impact on share prices.When the performance preannouncement is bad news,the unexpected earnings is not related to the Cumulated Abnormal Return in the time window of [-10,10].Finally,this paper makes some relevant suggestions for the regulatory authorities,listed companies and investors according to the results of this study.