Financial Statement Announcement and Its Effect on Stocks in Amman Bourse

Abstract

This study aims to test the effect of financial statement disclosure on stock prices on industrial shareholding companies, and investigating the information content of this statement on either stock prices and (trading volumes), it is also aims to investigate the ability of investors to earn abnormal return by using these information. This study draws sources of information from secondary data. The behavior of stock prices was studied on the basis of daily movements. On this paper an attempt was made to analyze the stock prices of all industrial shareholding companies listed in Amman bourse using market model to estimate the normal return and the percentage change of daily stock prices to estimate the actual return. Hypothesizes of this study were examined by using parametric tests as one-sample test and paired sample to test. It was found that there was no information content to these statements on stock prices. The investors could neither using this information to beat the market, nor earning abnormal return.  This study can be a source of help to industrial companies’ managers to improve either way of publishing financial statement or the information content of these statements. And it is also a source of help to investors to improve their understanding and reading of these statements.

Keywords: financial statement disclosure, stock prices, abnormal return, normal return, information content, Amman Bourse.