Review of Accounting Studies

, Volume 14, Issue 4, pp 559–586 | Cite as

Financial reporting complexity and investor underreaction to 10-K information

  • Haifeng You
  • Xiao-jun ZhangEmail author


We study the immediate and delayed market reaction to U.S. Securities and Exchange Commission (SEC) EDGAR 10-K filings. Unusual trading volumes and stock-price movements are documented during the days around the 10-K filing dates. The abnormal price movements are positively associated with future accounting profitability, indicating that 10-K reports contain useful information about future firm performance. In addition, investors’ reaction to 10-K information seems sluggish, as demonstrated by the stock-price drift during the 12-month period after 10-K filing. We find that investors’ underreaction tends to be stronger for firms with more complex 10-K reports.


Stock price drift 10-K filing Financial reporting complexity 

JEL Classification

D8 D53 G14 M41 



This paper has benefited greatly from comments and suggestions of an anonymous referee, Patricia Dechow, Shai Levi, and Katherine Schipper (editor). The editorial assistance of Joseph Cadora and the financial support of the Center for Financial Reporting and Management at University of California are gratefully acknowledged.


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Copyright information

© Springer Science+Business Media, LLC 2008

Authors and Affiliations

  1. 1.Barclays Global InvestorsSan FranciscoUSA
  2. 2.Haas School of BusinessUniversity of CaliforniaBerkeleyUSA

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