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We examine and compare the extent to which the reaction of investors to earnings announcements is influenced by a firm's governance profile and prevailing market conditions. We find that firms with better governance characteristics experience a larger initial reaction to both good and bad earnings announcements regardless of the prevailing sentiment and uncertainty conditions. However, the influence of governance is constrained to the announcement period. We demonstrate that changes in market uncertainty and/or investor sentiment are related to the post-earnings announcement drift. We also find that a major channel through which greater corporate governance influences the market response to unexpected earnings news is by lowering information uncertainty and so providing greater clarity of the implication of the news for firm value. Finally, we establish that two types of uncertainties (market and information) have very different influence on investor's response to information signals. JEL Classification: D81, G10, G14, G30, G32 [ABSTRACT FROM AUTHOR]

This laboratory experiment studies two-stage contests between political parties. In the first stage, parties run their primaries, and in the second stage, the winners of the primaries compete in the general election. The resource expenditures in the first stage by the winning candidates are partially or fully carried over to the second stage. Experimental results support all major theoretical predictions: the first-stage expenditures and the total expenditures increase, while the second-stage expenditures decrease in the carryover rate. Consistent with the theory, the total expenditures increase in the number of candidates and the number of parties. Contrary to the theory, however, expenditures in both stages of the competition exceed theoretical predictions. Disclosing information about the opponent's expenditures in the first stage increases the second-stage expenditures and decreases the first-stage expenditures. [ABSTRACT FROM AUTHOR]