Summary This report examines the existence of trends in the Australian stock market with respect to the effect of earnings announcements in the mining industry; particularly the effect on BHP Billiton. The price index of BHP Billiton and two of its competitors, Rio Tinto and Fortescue Metals Group, on the Australian Stock Exchange was recorded 3 weeks before and 3 weeks after a profit announcement to facilitate an investigation into behavior investors following the earnings announcement. dissemination of accounting information. A closer look at BHP Billiton's internal management and broader external economic forces was also carried out to better predict market reaction before analyzing actual investor reaction. Key factors including improvement in BHP's cash flow in and out, change in accounting standards and increase in leverage are integral to assessing the effect of a earnings announcement on a sector that was previously in gradual decline. Ultimately, it turned out to be a combination of these factors, plus a change in political circumstances that could be attributed to an increase in stock prices following the earnings announcement . This report aims to analyze the effect of publishing accounting information on investors' transactions. Specifically, the direct effect of a publicly traded company and two of its competitors announcing earnings figures and the resulting change in stock price due to the natural economic forces of demand and of investor perception of the sector as a whole. In view of this, the market reaction to the publication by BHP Billiton of its half-yearly profit and loss account will be studied to determine the direct effect that this announcement had on the price of the stock listed on the...... middle of paper ...... ns on investment. Additionally, internal and external factors were examined to explore the reasons why the stock price increased on the announcement date. A closer look at the financial ratios revealed that BHP's success to date has been to improve productivity through lower risk investments, essentially demonstrating that the company, while investing in higher risk programs , has stuck to the bread and butter of the company's trading business in order to increase cash flow so that net debt can be reduced in the second half of the financial year. As such, BHP is firmly in a period of consolidation with a focus on increasing the efficiency of outgoing cash flow and upfront debt payment while maintaining its reputation as a safe bet. which offers a consistent return on investment, thus reinforcing its leading position in the mining industry.