Using the evidence presented in Exhibit 14.8, describe the extent to which the market is efficient with respect to quarterly earnings surprises during the 60 trading days prior to quarterly earnings announcements. Using the evidence presented in Exhibit 14.8, describe the extent to which the market is efficient with respect to quarterly earnings surprises during the 60 trading days following quarterly earnings announcements.

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Exhibit 14.8 Evidence from Nichols and Wahlen (2004) Replication of Bemard and Thomas (1989) on Market Efficiency with Respect to Quarterly Eamin gs 0.08 UE Dectle 10 0.06 7/8/9 0.04 UE Decile 10 8/9 0.02 0.00 3/4 -0.02 -0.04 -0.06 -0.08 60-55-50-45-40-35-30-25-20-15-10 -5 0 05 10 15 20 25 30 35 40 45 50 55 60 Days Relative to Earnings Announcement Cum ulativeAbnor mal Return