How Do You Spell PEAD?
Pronunciation: [pˈiːd] (IPA) 
Correct spelling for the English word "PEAD" is [pˈiːd], [pˈiːd], [p_ˈiː_d] (IPA phonetic alphabet).
Pronunciation: [pˈiːd] (IPA)
Correct spelling for the English word "PEAD" is [pˈiːd], [pˈiːd], [p_ˈiː_d] (IPA phonetic alphabet).
PEAD, also known as Post-Earnings Announcement Drift, is a financial term that refers to the phenomenon where a company's stock tends to experience an abnormal price movement following the release of the company's earnings report.
After a company discloses its financial results to the public, investors and analysts evaluate these earnings announcements in order to assess the company's performance and financial health. PEAD refers to the tendency for a stock's price to either continue moving in the same direction as the earnings surprise or to reverse the initial price movement and exhibit a drift in the opposite direction.
This phenomenon is believed to occur because investors often do not fully process the information contained in the earnings report immediately. Instead, investors may gradually reassess and adjust their expectations based on the revealed financial performance of the company. As a result, the stock price may continue moving in the same direction as the original earnings surprise even after the news is released, leading to a drift in stock price over a certain time period.
PEAD is a topic of interest for both academics and market participants who study stock market anomalies. It is a departure from the efficient market hypothesis, which posits that stock prices fully reflect all available information. The persistence of PEAD suggests that investors can potentially exploit this drift by trading on the information contained in the earnings reports to generate abnormal returns.
