In Progress:
The Effect of Market Concentration on Intra-Industry Information Transfers Following Earnings Announcements
(with Renato Gomes and Rafael Rogo)

Abstract: Earnings announcements impact the stock price of the announcing firm and also of firms that have common risk factors, such as firms within the same industry. In this paper we derive a simple model that accounts for industry concentration, where a firm’s profit function is revealed through the sequence of earnings announcements of competing firms and of the firm itself. The transfer of information by competing firms in the same industry has interesting implications for stock price dynamics, but the magnitude of these effects depend on industry concentration. We examine the conclusions of the model in practice by testing empirically how industry concentration affects the transfer of information via earnings announcements of competing firms.