Financial Accounting and Equity Markets

Philip Brown* John W. Kennelly†

The Informational Content of Quarterly Earnings: An Extension and Some Further Evidence

Introduction

The usefulness of quarterly earnings per share (EPS) data is subject to some debate.¹ Our intent in this paper is to extend empirical knowledge of current reporting in one sense. While we adopt a different approach from the previous studies, our results have implications regarding them, and for future research.²

Previous empirical research addresses the contribution of quarterly EPS to predictions of (1) annual EPS³ or (2) ex post rates of return on common stocks for one- to twelve-year horizons.⁴ The results appear anomalous.⁵ We chose a different empirical design, based upon a different though still restricted, ...