Question
Which statement about the stock market response to companies' earnings surprises and the earnings anomaly is most likely true? A positive earnings surprise leads, on
Which statement about the stock market response to companies' earnings surprises and the earnings anomaly is most likely true? A positive earnings surprise leads, on average, to a negative stock return. An efficient capital market needs multiple quarters to price all information contained in a firm's earnings surprise. An inefficient capital market instantly prices all information contained in a firm's earnings surprise. The earnings anomaly is that you can earn an abnormal return by taking long positions in firms reporting a positive earnings surprise and short positions in firms with negative earnings surprise over the subsequent quarters.
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