Earnings Surprises and Signal Analysis. matt mcConnell David Nabwangu Eskil Sylwan Johnson Yeh. Agenda. Background Hypothesis Methodology Data Fitting Explanatory Variables Regression Results Conclusion. Market Reaction to News. In an Ideal World. Reality. In a More Realistic World.
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In an Ideal World
In a More Realistic World
We expect stock price to react to news like this:
* Results could be applicable to any news item – earnings are measurable
Correlation = 91.6%
Average Correlation = 80%
Correlation = 70%
6 explanatory variables for curve parameters