We show that the post earnings announcement drift (PEAD) is stronger for conglomerates than

  single-segment firms. Conglomerates, on average, are larger than single segment firms, so it is

  unlikely that limits-to-arbitrage drive the difference in PEAD. Rather, we hypothesize that market
  participants find it more costly and difficult to understand firm-specific earnings information
  regarding conglomerates which slows information processing about them. In support of our
  hypothesis, we find that, compared to single-segment firms with similar firmcharacteristics,
  conglomerates have lower institutional ownership, lower short interest, are covered by fewer
  analysts, these analysts have less industry expertise and also make larger forecast errors. Finally,
  we find that an  increase in firm complexity leads to  larger PEAD and  document that more
  complicated conglomerates have greater PEAD. Our results are robust to a long list of alternative
  explanations of PEAD as well as alternative measures of firm complexity.