This paper tests the investor distraction hypothesis, which posits that extraneous news events cause trading and market prices to react sluggishly to relevant earnings news. The study focuses on the competition for investor attention between a firm's earnings announcements and those of other firms. It finds that the immediate stock price and volume reaction to a firm's earnings surprise is weaker, and post-earnings announcement drift is stronger, when a greater number of earnings announcements by other firms are made on the same day. Distracting news has a stronger effect on firms that receive positive than negative earnings surprises. Industry-unrelated news has a stronger distracting effect than related news. A trading strategy that exploits post-earnings announcement drift is unprofitable for announcements made on days with little competing news. The paper uses quarterly earnings announcement data from CRSP-Compustat and IBES from 1995 to 2004. It calculates the daily number of quarterly earnings announcements and defines high-news days as days with a large number of competing announcements. The study finds that investors' announcement date reactions to earnings news are significantly less sensitive to earnings news on high-news days than on low-news days. The post-earnings announcement drift is significantly stronger on high-news days. The findings support the investor distraction hypothesis, suggesting that limited investor attention affects investor behavior and capital market prices. The study also finds that the distraction effect is greater in firms receiving positive earnings news. The results suggest that the number of competing announcements affects the sensitivity of returns to earnings, with more competing announcements leading to weaker immediate reactions and stronger post-announcement drift. The study concludes that extraneous news events can distract investors, causing market prices to underreact to relevant news.This paper tests the investor distraction hypothesis, which posits that extraneous news events cause trading and market prices to react sluggishly to relevant earnings news. The study focuses on the competition for investor attention between a firm's earnings announcements and those of other firms. It finds that the immediate stock price and volume reaction to a firm's earnings surprise is weaker, and post-earnings announcement drift is stronger, when a greater number of earnings announcements by other firms are made on the same day. Distracting news has a stronger effect on firms that receive positive than negative earnings surprises. Industry-unrelated news has a stronger distracting effect than related news. A trading strategy that exploits post-earnings announcement drift is unprofitable for announcements made on days with little competing news. The paper uses quarterly earnings announcement data from CRSP-Compustat and IBES from 1995 to 2004. It calculates the daily number of quarterly earnings announcements and defines high-news days as days with a large number of competing announcements. The study finds that investors' announcement date reactions to earnings news are significantly less sensitive to earnings news on high-news days than on low-news days. The post-earnings announcement drift is significantly stronger on high-news days. The findings support the investor distraction hypothesis, suggesting that limited investor attention affects investor behavior and capital market prices. The study also finds that the distraction effect is greater in firms receiving positive earnings news. The results suggest that the number of competing announcements affects the sensitivity of returns to earnings, with more competing announcements leading to weaker immediate reactions and stronger post-announcement drift. The study concludes that extraneous news events can distract investors, causing market prices to underreact to relevant news.