This paper studies the impact of earnings and disclosure in interim reports on stock markets. The effect fo earnings content and the degree of disclosure on stock returns together with possible interaction between them is examined. The data consists of stock market behavior around the announcement of reports published by firms listed on the Helsinki Stock Exchange during 1985-1993. Measures of disclosure are based on originally pronounced reports in order to avoid possible influence of any perception. It is found that high/low disclosure strengthens/weakens the effect of earnings announced. Furthermore, our findings indicate that there exists a time delay of about one week until the effect of interim report announcement is totally reflected in stock returns. In addition, highly negative and - somewhat surprisingly - also highly positive news both tend to have unfavorable effect on stock returns. This tendency may be interpreted as markets´ overoptimistic view to firm performance in the extremes.