Date of Award

1989

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Accounting

First Advisor

Anthony P. Curatola

Abstract

The purpose of this study is to determine whether options listing induces additional information acquisition and processing and hence causes a commensurate reduction in the information content of annual earnings announcements. The U-statistic is used to measure the information content of annual earnings announcements. The dissertation tests the options listing effects on four different designs: (i) all exchange (NYSE/AMEX) firms, (ii) large exchange firms versus small exchange firms, (iii) positive unexpected earnings firms versus negative unexpected earnings firms, and (iv) all over-the-counter firms. The research found that, after options listing, the U-statistic of the exchange firms decreases significantly during the annual earnings announcements day. The results also show significant increase in U-statistic during the pre-announcement period after option listing, indicating that the earnings information may have been impounded into the securities markets earlier. In testing the 'size' hypothesis, the results show that options listing has a moderately stronger impact on small firms than large firms. However, the results do not support the hypothesis that options listing has a stronger impact on firms with negative unexpected earnings than firms with positive unexpected earnings. Finally, the results show that options listing has a moderately significant impact on the information content of annual earnings announcements of the OTC firms.

Pages

116

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