Information in Order Backlog: Change versus Level
Information on order backlog has been disclosed in the notes to financial statements since 1970. However, it is not clear whether financial analysts understand its im- portance. Empirical researchers have pesented mixed evidence about the information of order backlog and how the analysts and investors react to it. We show that almost all information in order backlog is in the change, and that both the stock market and financial analysts substantially underreact to the information: While both the stock market and financial analysts partially understand the implication of an increase in order backlog on future sales growth, it appears as if they have no idea at all that the increase also implies better future profitability. This leads to an economically significant hedge return from a portfolio formed based on the change in order backlog. The results suggest that the disclosures of nonfinancial information and leading business indicators needs to be substantially improved.
Li Gu Zhiqiang Wang Jianming Ye
Fordham University School of Management,Xiamen University,Xiamen,Fujian,China,361005 Baruch College
国际会议
大连
英文
1-30
2008-07-02（万方平台首次上网日期，不代表论文的发表时间）