From the course: Business Math

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How the market responds so fast to an earnings announcement

How the market responds so fast to an earnings announcement

From the course: Business Math

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How the market responds so fast to an earnings announcement

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- As of 2017 there are about 5,000 companies with shares traded on U.S. stock exchanges. These companies fall under the jurisdiction of the Securities and Exchange Commission, the SEC, and are required to publicly release financial reports every quarter. So each year the SEC receives 20,000 financial report filings. 5,000 companies times four reports per year. These filings are typically preceded by a public press release of the company's net income. Now with about 250 business days each year, that means that the average business day contains 80 net income press releases. 20,000 press releases divided by 250 business days. 80 earnings announcements on an average day. And earnings announcements cluster during certain periods, such as a few days or a few weeks right around the end of the quarter. On those clustering days, there can be several 100 public corporate earnings announcements. So how long does it take for financial analysts and sophisticated market investors to sort through…

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