Number Processing Constraints and Earnings News

References

• Ackert LF , Church BK , Zhang P (2018) Informed traders’ performance and the information environment: Evidence from experimental asset markets. Accounting Organ. Soc. 70:1–15.Crossref, Google Scholar
• Amihud Y (2002) Illiquidity and stock returns: Cross-section and time-series effects. J. Financial Markets 5(1):31–56.Crossref, Google Scholar
• Asquith P , Healy P , Palepu K (1989) Earnings and stock splits. Accounting Rev. 64(3):387–403.Google Scholar
• Baker M , Greenwood R , Wurgler J (2009) Catering through nominal share prices. J. Finance 64(6):2559–2590.Crossref, Google Scholar
• Baker AC , Larcker DF , Wang CC (2022) How much should we trust staggered difference-in-differences estimates? J. Financial Econom. 144(2):370–395.Crossref, Google Scholar
• Balakrishnan K , Bartov E , Faurel L (2010) Post loss/profit announcement drift. J. Accounting Econom. 50(1):20–41.Crossref, Google Scholar
• Ball R , Brown P (1968) An empirical evaluation of accounting income numbers. J. Accounting Res. 6(2):159–178.Crossref, Google Scholar
• Banks WP , Coleman MJ (1981) Two subjective scales of number. Perception Psychophysics 29(2):95–105.Crossref, Google Scholar
• Barberis N , Shleifer A , Vishny R (1998) A model of investor sentiment. J. Financial Econom. 49(3):307–343.Crossref, Google Scholar
• Barton J , Berns GS , Brooks AM (2014) The neuroscience behind the stock market’s reaction to corporate earnings news. Accounting Rev. 89(6):1945–1977.Crossref, Google Scholar
• Bernard VL , Thomas JK (1989) Post-earnings-announcement drift: Delayed price response or risk premium? J. Accounting Res. 27:1–36.Crossref, Google Scholar
• Bernard VL , Thomas JK (1990) Evidence that stock prices do not fully reflect the implications of current earnings for future earnings. J. Accounting Econom. 13(4):305–340.Crossref, Google Scholar
• Birru J , Wang B (2016) Nominal price illusion. J. Financial Econom. 119(3):578–598.Crossref, Google Scholar
• Borusyak K, Jaravel X, Spiess J (2024) Revisiting event-study designs: Robust and efficient estimation. Rev. Econom. Stud. rdae007.Google Scholar
• Brown S , Hillegeist SA , Lo K (2009) The effect of earnings surprises on information asymmetry. J. Accounting Econom. 47(3):208–225.Crossref, Google Scholar
• Brown LD , Hagerman RL , Griffin PA , Zmijewski ME (1987) An evaluation of alternative proxies for the market’s assessment of unexpected earnings. J. Accounting Econom. 9(2):159–193.Crossref, Google Scholar
• Callaway B , Sant’Anna PH (2021) Difference-in-differences with multiple time periods. J. Econometrics 225(2):200–230.Crossref, Google Scholar
• Carlin BI (2009) Strategic price complexity in retail financial markets. J. Financial Econom. 91(3):278–287.Crossref, Google Scholar
• Cen L , Hilary G , Wei KJ (2013) The role of anchoring bias in the equity market: Evidence from analysts’ earnings forecasts and stock returns. J. Financial Quant. Anal. 48(1):47–76.Crossref, Google Scholar
• Cengiz D , Dube A , Lindner A , Zipperer B (2019) The effect of minimum wages on low-wage jobs. Quart. J. Econom. 134(3):1405–1454.Crossref, Google Scholar
• Chen Y , Jermias J , Panggabean T (2016) The role of visual attention in the managerial judgment of balanced-scorecard performance evaluation: Insights from using an eye-tracking device. J. Accounting Res. 54(1):113–146.Crossref, Google Scholar
• Cheong FS , Thomas J (2011) Why do EPS forecast error and dispersion not vary with scale? Implications for analyst and managerial behavior. J. Accounting Res. 49(2):359–401.Crossref, Google Scholar
• Cheong FS , Thomas J (2018) Management of reported and forecast EPS, investor responses, and research implications. Management Sci. 64(9):4277–4301.Link, Google Scholar
• Chi SS , Shanthikumar DM (2017) Local bias in Google search and the market response around earnings announcements. Accounting Rev. 92(4):115–143.Crossref, Google Scholar
• Chordia T , Shivakumar L (2005) Inflation illusion and post-earnings-announcement drift. J. Accounting Res. 43(4):521–556.Crossref, Google Scholar
• Christie AA (1987) On cross-sectional analysis in accounting research. J. Accounting Econom. 9(3):231–258.Crossref, Google Scholar
• Clarkson P , Nekrasov A , Simon A , Tutticci I (2020) Target price forecasts: The roles of the 52-week high price and recent investor sentiment. J. Bus. Finance Accounting 47(9–10):1365–1399.Crossref, Google Scholar
• Cowen A , Groysberg B , Healy P (2006) Which types of analysts are more optimistic? J. Accounting Econom. 41(1):119–146.Crossref, Google Scholar
• Daniel K , Hirshleifer D , Subrahmanyam A (1998) Investor psychology and security market under-and overreactions. J. Finance 53(6):1839–1885.Crossref, Google Scholar
• de Chaisemartin C , D’Haultfoeuille X (2020) Two-way fixed effects estimators with heterogeneous treatment effects. Amer. Econom. Rev. 110(9):2964–2996.Crossref, Google Scholar
• Dehaene S (2011) The Number Sense: How the Mind Creates Mathematics (Oxford University Press, Oxford, UK).Google Scholar
• Dehaene S , Mehler J (1992) Cross-linguistic regularities in the frequency of number words. Cognition 43(1):1–29.Crossref, Google Scholar
• Dehaene S , Bossini S , Giraux P (1993) The mental representation of parity and number magnitude. J. Experiment. Psych. Gen. 122(3):371–396.Crossref, Google Scholar
• Dehaene S , Dehaene-Lambertz G , Cohen L (1998) Abstract representations of numbers in the animal and human brain. Trends Neuroscience 21(8):355–361.Crossref, Google Scholar
• Dehaene S , Izard V , Spelke E , Pica P (2008) Log or linear? Distinct intuitions of the number scale in Western and Amazonian indigene cultures. Science 320(5880):1217–1220.Crossref, Google Scholar
• DellaVigna S , Pollet JM (2009) Investor inattention and Friday earnings announcements. J. Finance 64(2):709–749.Crossref, Google Scholar
• Deshpande M , Li Y (2019) Who is screened out? Application costs and the targeting of disability programs. Amer. Econom. J. Econom. Policy 11(4):213–248.Crossref, Google Scholar
• Dickhaut J (2009) The brain as the original accounting institution. Accounting Rev. 84(6):1703–1712.Crossref, Google Scholar
• Doyle JT , Lundholm RJ , Soliman MT (2006) The extreme future stock returns following I/B/E/S earnings surprises. J. Accounting Res. 44(5):849–887.Crossref, Google Scholar
• Drake MS , Roulstone DT , Thornock JR (2015) The determinants and consequences of information acquisition via EDGAR. Contemporary Accounting Res. 32(3):1128–1161.Crossref, Google Scholar
• Easton PD , Harris TS (1991) Earnings as an explanatory variable for returns. J. Accounting Res. 29(1):19–36.Crossref, Google Scholar
• Easton PD , Zmijewski ME (1989) Cross-sectional variation in the stock market response to accounting earnings announcements. J. Accounting Econom. 11(2–3):117–141.Crossref, Google Scholar
• Fama EF (1998) Market efficiency, long-term returns, and behavioral finance. J. Financial Econom. 49(3):283–306.Crossref, Google Scholar
• Farrell AM , Goh JO , White BJ (2014) The effect of performance-based incentive contracts on system 1 and system 2 processing in affective decision contexts: fMRI and behavioral evidence. Accounting Rev. 89(6):1979–2010.Crossref, Google Scholar
• Feldman R , Govindaraj S , Livnat J , Segal B (2010) Management’s tone change, post earnings announcement drift and accruals. Rev. Accounting Stud. 15(4):915–953.Crossref, Google Scholar
• Foster G , Olsen C , Shevlin T (1984) Earnings releases, anomalies, and the behavior of security returns. Accounting Rev. 59(4):574–603.Google Scholar
• Frazzini A (2006) The disposition effect and underreaction to news. J. Finance 61(4):2017–2046.Crossref, Google Scholar
• Freeman RN , Tse SY (1992) A nonlinear model of security price responses to unexpected earnings. J. Accounting Res. 30(2):185–209.Crossref, Google Scholar
• Frydman C , Wang B (2020) The impact of salience on investor behavior: Evidence from a natural experiment. J. Finance 75(1):229–276.Crossref, Google Scholar
• Frydman C , Hartzmark SM , Solomon DH (2018) Rolling mental accounts. Rev. Financial Stud. 31(1):362–397.Crossref, Google Scholar
• Goodman-Bacon A (2021) Difference-in-differences with variation in treatment timing. J. Econometrics 225(2):254–277.Crossref, Google Scholar
• Gordon MJ (1959) Dividends, earnings, and stock prices. Rev. Econom. Statist. 42(2):99–105.Crossref, Google Scholar
• Gordon MJ , Shapiro E (1956) Capital equipment analysis: The required rate of profit. Management Sci. 3(1):102–110.Link, Google Scholar
• Green TC , Hwang B-H (2009) Price-based return comovement. J. Financial Econom. 93(1):37–50.Crossref, Google Scholar
• Griffin JM , Kelly PJ , Nardari F (2010) Do market efficiency measures yield correct inferences? A comparison of developed and emerging markets. Rev. Financial Stud. 23(8):3225–3277.Crossref, Google Scholar
• Grinblatt M , Keloharju M , Linnainmaa JT (2011) IQ and stock market participation. J. Finance 66(6):2121–2164.Crossref, Google Scholar
• Grinblatt M , Keloharju M , Linnainmaa JT (2012) IQ, trading behavior, and performance. J. Financial Econom. 5(5):43–67.Google Scholar
• He X , Yin H , Zeng Y , Zhang H , Zhao H (2019) Facial structure and achievement drive: Evidence from financial analysts. J. Accounting Res. 57(4):1013–1057.Crossref, Google Scholar
• Hirshleifer D , Lim SS , Teoh SH (2009) Driven to distraction: Extraneous events and underreaction to earnings news. J. Finance 64(5):2289–2325.Crossref, Google Scholar
• Hirshleifer D , Levi Y , Lourie B , Teoh SH (2019) Decision fatigue and heuristic analyst forecasts. J. Financial Econom. 133(1):83–98.Crossref, Google Scholar
• Hirshleifer D , Lourie B , Ruchti TG , Truong P (2021) First impression bias: Evidence from analyst forecasts. Rev. Finance 25(2):325–364.Crossref, Google Scholar
• Hirshleifer DA , Myers JN , Myers LA , Teoh SH (2008) Do individual investors cause post-earnings announcement drift? Direct evidence from personal trades. Accounting Rev. 83(6):1521–1550.Crossref, Google Scholar
• Hsieh T-S , Kim J-B , Wang RR , Wang Z (2020) Seeing is believing? Executives’ facial trustworthiness, auditor tenure, and audit fees. J. Accounting Econom. 69(1):101260.Crossref, Google Scholar
• Huang X , Nekrasov A , Teoh SH (2018) Headline salience, managerial opportunism, and over-and underreactions to earnings. Accounting Rev. 93(6):231–255.Crossref, Google Scholar
• Hubbard EM , Piazza M , Pinel P , Dehaene S (2005) Interactions between number and space in parietal cortex. Nature Rev. Neuroscience 6(6):435–448.Crossref, Google Scholar
• Hung M , Li X , Wang S (2015) Post-earnings-announcement drift in global markets: Evidence from an information shock. Rev. Financial Stud. 28(4):1242–1283.Crossref, Google Scholar
• Hyde DC , Spelke ES (2009) All numbers are not equal: An electrophysiological investigation of small and large number representations. J. Cognitive Neuroscience 21(6):1039–1053.Crossref, Google Scholar
• Jegadeesh N , Livnat J (2006) Post-earnings-announcement drift: The role of revenue surprises. Financial Anal. J. 62(2):22–34.Crossref, Google Scholar
• Jia Y , van Lent L , Zeng Y (2014) Masculinity, testosterone, and financial misreporting. J. Accounting Res. 52(5):1195–1246.Crossref, Google Scholar
• Jung M, Keeley J, Ronen J (2017) The predictability of analyst forecast revisions. J. Accounting Auditing Finance 34(3):434–457.Google Scholar
• Knutson B, Delgado MR, Phillips PEM (2009) Chapter 25: Representation of subjective value in the striatum. Glimcher PW, Camerer CF, Fehr E, Poldrack RA, eds. Neuroeconomics: Decision Making and the Brain (Academic Press, New York), 389–406.Google Scholar
• Korniotis GM , Kumar A (2011) Do behavioral biases adversely affect the macro-economy? Rev. Financial Stud. 24(5):1513–1559.Crossref, Google Scholar
• Kuhnen CM (2015) Asymmetric learning from financial information. J. Finance 70(5):2029–2062.Crossref, Google Scholar
• Kuhnen CM , Knutson B (2011) The influence of affect on beliefs, preferences, and financial decisions. J. Financial Quant. Anal. 46(3):605–626.Crossref, Google Scholar
• Lakonishok J , Lev B (1987) Stock splits and stock dividends: Why, who, and when. J. Finance 42(4):913–932.Crossref, Google Scholar
• Lawrence A , Ryans J , Sun E , Laptev N (2018) Earnings announcement promotions: A Yahoo Finance field experiment. J. Accounting Econom. 66(2–3):399–414.Crossref, Google Scholar
• Lehavy R , Li F , Merkeley K (2011) The effect of annual report readability on analyst following and the properties of their earnings forecasts. Accounting Rev. 86(3):1087–1115.Crossref, Google Scholar
• Liang L (2003) Post-earnings announcement drift and market participants’ information processing biases. Rev. Accounting Stud. 8(2–3):321–345.Crossref, Google Scholar
• Livnat J , Mendenhall RR (2006) Comparing the post-earnings announcement drift for surprises calculated from analyst and time series forecasts. J. Accounting Res. 44(1):177–205.Crossref, Google Scholar
• Longo MR , Lourenco SF (2007) Spatial attention and the mental number line: Evidence for characteristic biases and compression. Neuropsychologia 45(7):1400–1407.Crossref, Google Scholar
• Loughran T , McDonald B (2017) The use of EDGAR filings by investors. J. Behav. Finance 18(2):231–248.Crossref, Google Scholar
• Mendenhall RR (2004) Arbitrage risk and post-earnings-announcement drift. J. Bus. 77(4):875–894.Crossref, Google Scholar
• Nieder A (2019) A Brain for Numbers: The Biology of the Number Instinct (MIT Press, Cambridge, MA).Crossref, Google Scholar
• Nieder A (2020) Neural constraints on human number concepts. Current Opinion Neurobiology 60:28–36.Crossref, Google Scholar
• Ohlson JA (1991) The theory of value and earnings, and an introduction to the Ball-Brown analysis. Contemporary Accounting Res. 8(1):1–19.Crossref, Google Scholar
• Ohlson JA , Shroff PK (1992) Changes vs. levels in earnings as explanatory variables for returns: Some theoretical considerations. J. Accounting Res. 30(2):210–226.Crossref, Google Scholar
• Roger T , Roger P , Schatt A (2018) Behavioral bias in number processing: Evidence from analysts’ expectations. J. Econom. Behav. Organ. 149:315–331.Crossref, Google Scholar
• Ryans J (2017) Using the EDGAR log file data set. Working paper, London Business School, London.Google Scholar
• Shue K , Townsend RR (2021) Can the market multiply and divide? Non-proportional thinking in financial markets. J. Finance 76(5):2307–2357.Crossref, Google Scholar
• Skinner DJ , Sloan RD (2002) Earnings surprises, growth expectations, and stock returns or don’t let an earnings torpedo sink your portfolio. Rev. Accounting Stud. 7(2–3):289–312.Crossref, Google Scholar
• Stigler GJ (1965) Essays in the History of Economics (University of Chicago Press, Chicago).Google Scholar
• Subramanyam K (1996) Uncertain precision and price reactions to information. Accounting Rev. 71(2):207–220.Google Scholar
• Sun L, Abraham S (2021) Estimating dynamic treatment effects in event studies with heterogeneous treatment effects. J. Econometrics 225(2):175–199.Google Scholar
• Thaler R (1980) Toward a positive theory of consumer choice. J. Econom. Behav. Organ. 1(1):39–60.Crossref, Google Scholar
• Thaler RH (1999) Mental accounting matters. J. Behav. Decision Making 12(3):183–206.Crossref, Google Scholar
• Tversky A , Kahneman D (1981) The framing of decisions and the psychology of choice. Sci. 211(4481):453–458.Crossref, Google Scholar
• Viarouge A , Hubbard EM , Dehaene S , Sackur J (2010) Number line compression and the illusory perception of random numbers. Experiment. Psych. 57(6):446–454.Crossref, Google Scholar