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One explanation for the phenomenon of stock price drift involves the limitations of investors’ attention span. This study finds that investors often under-react to earnings announcements when numerous firms release their results on the same day. Particularly in the case of earnings surprises, however, stock prices gradually move in the expected direction over time, even if the initial reaction is muted. This slow adjustment appears to reflect investors belatedly processing the announcement information and incorporating that into the stock prices. Thus, for hospitality stocks at least, market efficiency is delayed due to humans’ slow response to a heavy information load. This under-reaction has the longer-term effect that stocks whose earnings are announced on days with the highest information load also experience greater post-earnings-announcement drift, as their prices make up for the initial under-reaction by moving towards fair value over the subsequent month. One implication is that hospitality investors who are “late to the party” by not making a move on the earnings announcement day can still anticipate further price changes as the stock price moves to its fair value.


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