Earnings shocks: An event study on Boursa Kuwait
Keywords:Earnings Shocks, Boursa Kuwait, Earnings Announcements, Stock Prices
This study investigates the effects of earnings announcements on stock prices in Boursa Kuwait, formerly known as the Kuwait Stock Exchange (KSE). The data spans the period 2018–2020, and both positive and negative earnings announcements are employed as shock events and their effects assessed. The study results show that there is a statistically abnormal rate of return before and after the earnings announcements and that most abnormal returns are just after the earnings announcement. This most likely indicates that Boursa Kuwait is a semi-strong efficient stock market. One important implication is an indication that insider-related trading might be absent in Boursa Kuwait.
Abdmoulah, W. (2010). Testing the evolving efficiency of Arab stock markets, International Review of Financial Analysis, 19 (2010), 25-34.
Aharony, J., Swary, I. (1980). Quarterly Dividend and Earnings Announcements and Stockholders’ Returns: An Empirical Analysis, Journal of Finance, 35 (1), 1-12.
Abraham, A., Seyyed, F. J. & Alsakran, S. A. (2002). Testing the Random Walk Behavior and Efficiency of the Gulf Stock Markets, Financial Review, 37 (3), 469-480.
Ball, R. (1978). Anomalies in Relationships Between Securities’ Yields and Yield-surrogates, Journal of Financial Economics, 6 (2/3), 103-126.
Barber, B. M. & Lyon, J. D. (1997). Detecting abnormal operating performance: The empirical power and specification of test statistics, Journal of Financial Economics, 43, 341-372.
Bartov, E., Givoly, D. & Hayn, C. (2002). The rewards to meeting or beating earnings expectations, Journal of Accounting and Economics, 33, 173-204.
Campbell, J. Y., Lo, A. W. and MacKinlay, A. C. (1997). Event Studies in Economics and Finance, Journal of Economic Literature, 35 (1), 13-39
Eckbo, E. B. (2011). Handbook of Empirical Corporate Finance: Empirical Corporate Finance, London: Elsevier.
Fama, E. (1970), Efficient Capital Markets: A Review of Theory and Empirical Work. The Journal of Finance, 25(2), 383.
Fama, E. F. (1998). Market Efficiency, Long-Term Returns, and Behavioral Finance, Journal of Financial Economics, 49, 283-306.
Hong, H. and Stein, J. (1999). A Unified Theory of Underreaction, Momentum Trading, and Overreaction in Asset Markets. J Finance, 54(6), 2143-2184.
Lagoarde-Segot, T. and Lucey, B. M. (2008). Efficiency in emerging markets – Evidence from the MENA region, Journal of International Financial Markets, Institutions and Money, 18 (1), 94-105.
Loughran, T. and Vijh, A. M. (1997). Do Long-Term Shareholders Benefit from Corporate Acquisitions?, Journal of Finance, 52 (5), 1765-1790.
Mlonzi, V. F., Kruger, J. and Nthoesane (2011). Share price reaction to earnings announcement on the JSE-ALtX: A test for Market Efficiency, South African Business Review, 15 (3).
Pyemo, A. (2011). Stock Price Response to Earnings Announcements: Evidence from the Nigerian Stock Market, Journal of Accounting Research, 52, 661-696.
Sharpe, W. F. (1964). Capital Asset Prices: A Theory of Market Equilibrium under Conditions of Risk, Journal of Finance, 19 (3), 425-442.
Sponholtz, C. (2005). The information content of earnings announcements in Denmark, EAA Conference, Prague 2005: European Accounting Association Conference.
Wang, C. and Phet, G. K. (2012). Stock Return Performance around Earnings Announcements: Empirical Evidence from Nordic Stock Market, Master’s Thesis: Umea School of Business and Economics.
Watts, R. L. (1978). Systematic ‘Abnormal’ Returns After Quarterly Earnings Announcements, Journal of Financial Economics, 6 (2/3), 127-150.
How to Cite
Copyright (c) 2021 Saad B F M AlHajraf
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors contributing to IJRBS agree to publish their articles under the Creative Commons Attribution- 4.0 International (CC BY 4.0) license, allowing third parties to share their work (copy, distribute, transmit) and to adapt it, under the condition that the authors are given credit, that the work is not used for commercial purposes, and that in the event of reuse or distribution, the terms of this license are made clear. Authors retain the copyright of their work, with first publication rights granted to IJRBS. However, authors are required to transfer copyrights associated with commercial use to the Publisher. The authors agree to the terms of this Copyright Notice, which will apply to this submission if and when it is published by this journal
Submission of an article implies that the work described has not been published previously (except in the form of an abstract or as part of a published lecture or academic thesis), that it is not under consideration for publication elsewhere, that its publication is approved by all authors and tacitly or explicitly by the responsible authorities where the work was carried out, and that, if accepted, it will not be published elsewhere in the same form, in English or in any other languages, without the written consent of the Publisher. The Editors reserve the right to edit or otherwise alter all contributions, but authors will receive proofs for approval before publication