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The information content of earnings announcements in Denmark

Carina Sponholtz (Department of Management, University of Aarhus, Aarhus, Denmark)

International Journal of Managerial Finance

ISSN: 1743-9132

Article publication date: 18 January 2008




The purpose of this paper is to examine the reaction to earnings announcements in a small stock market.


The paper uses the traditional event study method to examine the information content of annual earnings announcements in the small Danish stock market from 1999‐2004.


The paper finds abnormal volatility in the days surrounding the announcements, indicating that they contain relevant information for the stock market. The abnormal volatility persists several days after the announcement, suggesting that the information environment of this small stock market works to decrease the speed of adjustment. In addition to this sign of inefficiency, the paper finds significant positive abnormal returns accompanying the announcements. These results are robust across various methodologies. Surprisingly, the paper finds a positive correlation between the information content and predisclosure information. This contradicts previous studies, and it is interpreted as evidence of a low level of pre‐announcement information. Confirming the results of similar studies, the paper finds that unexpected earnings are best proxied using a model based on consensus analyst forecasts.


This paper contributes to the existing literature by analyzing the information content of earnings announcements in a small stock market with accounting standards that are congruent with the International Accounting Standards.



Sponholtz, C. (2008), "The information content of earnings announcements in Denmark", International Journal of Managerial Finance, Vol. 4 No. 1, pp. 4-36.



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Copyright © 2008, Emerald Group Publishing Limited

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