Market reaction to banks’ interim press releases: an event study analysis

This study measures the effect of financial reporting on the prices and volumes traded of banks’ outstanding stocks around the disclosure of interim financial information, which is a critical issue in a bank strategy, its management and corporate governance as a whole. We investigate whether earning press releases are relevant for driving investor decisions by using a multi-model event study on a sample of 674 press releases disclosed during the period 2010–2017 from the 28 Global Systemically Important Banks (G-SIBs). Our results show a negative statistically significant impact on stock prices and trading volumes in the very next days following the publication date of a press release. This calls for a reflection on the need to regulate earnings press release contents and propose a standardized framework of disclosure. The study extends a multi-dimensional insight for various stakeholders and contributes to the ongoing debate of financial disclosure in banking institutions