Comment on "Post-Earnings Announcement Drift and the Diseemination of Predictable Information".

This article comments on the article "Post-Earnings Announcement Drift and the Dissemination of Predictable Information," by Leonard C. Soffer and Thomas Lys and the model they developed to infer the extent to which the information in quarterly earnings announcements is incorporated into investors' expectations for the subsequent quarterly earnings. The author offers validity tests to determine if Soffer and Lys's model is capable of producing the statistical results that they do. The findings of the paper encourage the author to continue research into earnings surprise research for firms reporting profits.