Intra‐Industry Transfers of Earnings Related Information Available to Purchase

The purpose of this study is to examine the direction of intra‐industry information transfers assuming a monopolistic competition within the industry and profit maximizing behaviors of each firm. Accounting earnings are decomposed into expenses and revenues. Both expenses and revenues are again broken down to industry common factors and firm specific factors. And the effect of these four income components of a firm on profits and hence security returns of that firm as well as those of other firms in the same industry are addressed. The main conclusions are: the first, announcing firm's firm specific costs have a negative association with its own security returns but a positive association with silent‐competing firms' security returns. The second, announcing firm's firm specific revenues have a positive association with its own security returns but a negative association with silent‐competing firms' security returns. The third, industry common cost factors (e.g. industry average cost) have a negative association with security returns of announcing firm and silent‐competing firms. The fourth, industry common revenue factors (e.g. industry average revenue) have a positive association with security returns of announcing firm and silent‐competing firms.