Implications of Sticky Cost Behavior for Earnings Surprise and Market Reaction

This dissertation examines the cost behavior model implicit in analysts' and investors' decisions. Even though a cost behavior model that recognizes fixed and variable costs and cost stickiness can provide more accurate earnings forecasts, analysts and investors cannot fully capture sticky cost information. Since analysts are not fully aware of the correct cost behavior model, earnings surprises can be largely explained by a cost model that recognizes sticky stickiness. Similarly, investors' under-reaction to sticky cost information relates to post-earnings announcement drifts. As a result, positive abnormal returns can be earned by a trading strategy that takes advantage of investors' lower awareness of sticky cost information.

Grantor dc:publisher

Temple University. Libraries

Year dc:date.issued

2013

Author dc:creator

• Chen, Janice Yun-Sheng

Advisor dc:contributor.advisor

• Banker, Rajiv D.

Committee members dc:contributor.committeemember

• Basu, Sudipta, 1965-
• Byzalov, Dmitri
• Naveen, Lalitha

• Accounting
• Earnings Surprise
• Post Earnings Announcement Drift
• Sticky Cost Behavior

Statement dc:rights

• IN COPYRIGHT- This Rights Statement can be used for an Item that is in copyright. Using this statement implies that the organization making this Item available has determined that the Item is in copyright and either is the rights-holder, has obtained permission from the rights-holder(s) to make their Work(s) available, or makes the Item available under an exception or limitation to copyright (including Fair Use) that entitles it to make the Item available.

Licence dc:rights.uri

• http://rightsstatements.org/vocab/InC/1.0/

Language dc:language.iso

eng

Dc Identifier Other

864885881

OAI identifier oai:identifier

oai:scholarshare.temple.edu:20.500.12613/955