Research has found that investors tend to react to earnings surprises
A)slowly,which illustrates conservatism.
B)immediately and fully on the day the information becomes public.
C)quickly and efficiently.
D)in the same manner whether they are positive or negative surprises.
E)always in a negative manner as they do not like any surprises.

Question

Quizplus · Accepted Answer

Research indicates that investors often react to earnings surprises with conservatism, meaning they adjust their beliefs and actions more slowly than might be expected. This is because they may be hesitant to fully incorporate the new information into their valuations immediately, preferring instead to wait for further confirmation.

Research Has Found That Investors Tend to React to Earnings