Speaker: Dr Bin Li (University of Houston, Bauer College of Business)
Hosted by: University of Liverpool Management School's Accounting and Finance Group
Open to: all University of Liverpool staff and students, with no sign up needed
Date: Wednesday 29 November 2023
Time: 3-4.30pm
Place: Management School - Seminar Room 1
Abstract
Beaver, McNichols and Wang (2020) posit with supporting evidence that the increased market response to earnings announcements over time is partially driven by changes in information supply.
We offer an additional explanation by focusing on information demand. Specifically, our paper attributes this phenomenon to reduced information acquisition costs stemming from technological developments proxied by broadband internet availability.
We rely on the variation in broadband subscription across firm locations and over time to document that abnormal return volatility and abnormal trading volume during earnings announcements increase with broadband usage. Similarly, we find higher earnings response coefficients around earnings announcements followed by lower post-earnings announcement drifts when investors have better broadband access.
To enhance identification, we rely on internet disruptions caused by major power outages, and find that the market response to earnings announcements declines when internet is disrupted.
Further analysis reveals that the informational benefits from broadband access mainly accrues to retail investors, rather than institutional investors.
Overall, our evidence is consistent with technological advancements improving investor trading and price formation by facilitating information acquisition.
Co-authored by Dr Bin Li, and Professor Mohan Venkatachalam.
Keywords
Capital markets; Earnings announcements; Broadband internet; Retail Investors; Institutional investors
Speaker
Bin Li is an Assistant Professor of Accounting and Bauer Research Fellow at the University of Houston, C. T. Bauer College of Business. His primary research interest focuses on the impact of accounting disclosures, both mandatory and voluntary, on investor decisions and firm value.
He also pursues research in corporate finance, regulatory enforcement, and standard setting. His work has been published in top accounting and business journals and has received multiple awards, including the Notable Contribution to Accounting Literature Award and the FARS Best Paper Award.
Before joining the University of Houston, Professor Li served as an Assistant Professor of Accounting at the University of Texas at Dallas and the University of Oklahoma. He completed his Ph.D. in Accounting at Duke University in 2012.
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