The effect of white collar crime announcement on stock price performance

2016 ◽  
Vol 23 (4) ◽  
pp. 1126-1139 ◽  
Author(s):  
Liang-Mui Tay ◽  
Chin-Hong Puah ◽  
Rayenda Khresna Brahmana ◽  
Nurul Izza Abdul Malek
Keyword(s):  
Stock Price ◽  
White Collar Crime ◽  
Abnormal Returns ◽  
White Collar ◽  
Listed Companies ◽  
Share Price ◽  
Content Type ◽  
Price Reaction ◽  
Price Performance ◽  
Stock Price Reaction

Purpose The purpose of this paper is to investigate the connection between ethics and profitability by examining the association between published reports on white-collar crime and the share-price performance of the Malaysian-listed companies. This study aims to examine the role of white-collar crime in Malaysian-listed companies on its stock-price reaction. Design/methodology/approach Following prior research, even study methodology is used to exploit the stock-price reaction on the white-collar crime announcement. The daily bases of average abnormal returns (AARs) and cumulative average abnormal returns (CAARs) with an event window of 90 days prior to and after the announcements are determined. This study uses public announcement data of white-collar crimes from Malaysian Securities Commission from 1996 to 2013. Findings The finding indicates that an announcement of a white-collar crime has a negative abnormal return on the share price. As a result, the market does not react efficiently toward the information released regarding the incidence of a white-collar crime. Practical implications This study contributes to the managerial decision theory, where managers should be able to see a definite connection between unethical behavior and their firm’s stock. The stockholders and policymakers should find this information important in pressing for greater corporate and managerial accountability. Originality/value Unlike prior research, this paper investigates the stock-price performance due to white-collar crime announcement in the Malaysian context by using complete data set of announcement from 1996 to 2013.

Stock market reaction to cash dividends: evidence from the Nigerian stock market

2019 ◽  
Vol 45 (3) ◽  
pp. 366-380
Author(s):  
Friday Kennedy Ozo ◽  
Thankom Gopinath Arun
Keyword(s):  
Stock Market ◽  
Event Study ◽  
Stock Price ◽  
Abnormal Returns ◽  
Cash Dividend ◽  
Content Type ◽  
Price Reaction ◽  
Stock Market Reaction ◽  
Dividend Announcements ◽  
Stock Price Reaction

PurposeVery little is known about the effect of dividend announcements on stock prices in Nigeria, despite the country’s unique institutional environment. The purpose of this paper is, therefore, to provide empirical evidence on this issue by investigating the stock price reaction to cash dividends by companies listed on the Nigerian Stock Exchange.Design/methodology/approachStandard event study methodology, using the market model, is employed to determine the abnormal returns surrounding the cash dividend announcement date. Abnormal returns are also calculated employing the market-adjusted return model as a robustness check and to test the sensitivity of the results toβestimation. The authors also examine the interaction between cash dividends and earnings by estimating a regression model where announcement abnormal returns are a function of both dividend changes and earnings changes relative to stock price.FindingsThe study find support for the signaling hypothesis: dividend increases are associated with positive stock price reaction, while dividend decreases are associated with negative stock price reaction. Companies that do not change their dividends experience insignificant positive abnormal returns. The results also suggest that both dividends and earnings are informative, but dividends contain information beyond that contained in earnings.Research limitations/implicationsThe sample for the study includes only cash dividend announcements occurring without other corporate events (such as interim dividends, stock splits, stock dividends, and mergers and acquisitions) during the event study period. The small firm-year observations may limit the validity of generalizations from these conclusions.Practical implicationsThe findings are useful to researchers, practitioners and investors interested in companies listed on the Nigerian stock market for their proper strategic decision making. In particular, the results can be used to encourage transparency and good governance practices in the Nigerian stock market.Originality/valueThis paper adds to the very limited research on the stock market reaction to cash dividend announcements in Nigeria; it is the first of its kind employing a unique cash dividends data.

Good times, bad times: the stock market performance of firms that own high value brands

2016 ◽  
Vol 50 (5/6) ◽  
pp. 670-694 ◽  
Author(s):  
Kevin Voss ◽  
Mayoor Mohan
Keyword(s):  
Chief Executive Officers ◽  
Stock Price ◽  
Ad Hoc ◽  
Chief Executive ◽  
Share Price ◽  
Content Type ◽  
Price Performance ◽  
Stock Market Performance ◽  
Using Data ◽  
Executive Officers

Purpose The purpose of the this paper is to correct a deficiency in the published literature by examining the share price performance of firms that own high-value brands in uptrending, downtrending and sideways markets. Design/methodology/approach The authors examined stock price performance for an index of firms that owned brands in the Interbrand list of the “Best Global Brands” from 2001 through 2009 using the Fama-French method. Findings The authors’ index outperformed the Standard & Poor’s 500 when the market was up or downtrending, but not when it moved sideways. Research limitations/implications The authors find that an index of firms that own the produced better returns than the Standard & Poor’s 500 market index. Owning highly valued brands may be a marketplace signal to the investing community regarding the firm’s management acumen. Practical implications Owning high-value brands seems to influence share price performance, a metric used to judge chief executive officers. Thus, brand investments align with the shareholders’ interest. The authors help alleviate the perception (Challagalla et al., 2014) that marketing managers make investments on an ad hoc basis. Originality/value For the first time, the authors evaluate the effect of owning one or more of the world’s most valuable brands on the market value of common stock using data from downtrending, uptrending and no-trend periods. This research is also among the first to introduce volatility into the Fama-French method and it is an important explanatory variable. This paper’s approach has interesting comparisons to other papers taking a similar analytical approach.

scholarly journals The Market Reaction to the Appointment of Women on Corporate Boards: Evidence from the Italian Listed Companies

2017 ◽  
Vol 12 (12) ◽  
pp. 64 ◽  
Author(s):  
Patrizia Pastore ◽  
Silvia Tommaso ◽  
Antonio Ricciardi
Keyword(s):  
Stock Price ◽  
Market Reaction ◽  
Abnormal Returns ◽  
Value Added ◽  
Listed Companies ◽  
Corporate Boards ◽  
Women Directors ◽  
Future Performance ◽  
Price Performance ◽  
Strategic Value

During the 2012-2016 period, a large number of Italian companies appointed women directors in their boards, an unusual and unpredictable fact in the Italian industrial system. This paper investigates if any significant reaction has consequently occurred in the Italian stock market. It assumes that a significant market reaction would indicate the investors view the female board members as a strategic value added at the decision making level. To achieve the objective, it was collected a database consisting of 76 appointments of women directors in 67 Italian listed companies over the period 2012-2016 and then it was investigated the stock price performance of those companies in that five years span. The research hypothesis is examined empirically through the event study methodology in order to check the existence of abnormal returns on the appointment of women directors. Findings suggest that investors do not strongly believe that the simple appointment of women directors would have a positive effect on the future performance of firms.

scholarly journals Social media and stock price reaction to data breach announcements: Evidence from US listed companies

2019 ◽  
Vol 47 ◽  
pp. 458-469 ◽  
Author(s):  
Pierangelo Rosati ◽  
Peter Deeney ◽  
Mark Cummins ◽  
Lisa van der Werff ◽  
Theo Lynn
Keyword(s):  
Social Media ◽  
Stock Price ◽  
Listed Companies ◽  
Data Breach ◽  
Price Reaction ◽  
Stock Price Reaction

scholarly journals Stock price reaction to cash dividend announcements in Vietnam

2017 ◽  
Vol 24 (02) ◽  
pp. 74-89
Author(s):  
Truong Nguyen Xuan ◽  
Huong Dao Mai ◽  
Anh Nguyen Thi Van
Keyword(s):  
Stock Prices ◽  
Stock Price ◽  
Stock Exchange ◽  
Abnormal Returns ◽  
Cash Dividend ◽  
Share Prices ◽  
Price Reaction ◽  
Cumulative Abnormal Returns ◽  
Stock Price Reaction ◽  
The Uk

This study attempts to investigate the stock price reaction to divi-dend announcements using data of Vietnamese listed firms on Hochiminh Stock Exchange (HOSE). Standard event study meth-odology has been employed on a sample of 198 cash dividend an-nouncements made in 2011. The results show that stock prices react significantly and positively to the announcements of cash dividends, including both dividend increasing and dividend decreasing events. It is also plausible that cumulative abnormal returns exhibit an in-creasing trend before announcement yet a decreasing trend after announcement dates. More specifically, we find positively signifi-cant cumulative abnormal returns of around 1.03% on announce-ment dates; other larger windows also demonstrate positive abnor-mal returns of around 1.3%. In addition, cash dividends have differ-ent effects on share prices of firms from different industries. These results support the signaling hypothesis and are also consistent with prior findings of empirical research done on more developed mar-kets, i.e. the US and the UK.

Bank Stock Returns And Quarterly Earnings: Price Responses To Imminent Earnings Announcements

2011 ◽  
Vol 11 (2) ◽  
pp. 135 ◽  
Author(s):  
Thomas F. Gosnell ◽  
Andrea J. Heuson ◽  
Robert E. Lamy
Keyword(s):  
Stock Returns ◽  
Stock Price ◽  
Earnings Announcements ◽  
Abnormal Returns ◽  
Quarterly Earnings ◽  
Price Reaction ◽  
Earnings Information ◽  
Bank Stock Returns ◽  
Stock Price Reaction ◽  
Bank Stock

Numerous studies have documented that most of the stock price reaction to earnings announcements have occurred by the time the earnings information is made public. This study considers stock price reaction during the time period between the end of the accounting calendar when the forthcoming earnings information is ostensibly available to top management and the earnings release date to measure anticipatory price responses to imminent quarterly earnings announcements. Using bank stocks, the results indicate that portfolios composed of banks that eventually announce improved earnings show significant positive abnormal returns soon after the close of the accounting quarter while portfolios composed of banks that eventually publicize poor profit performance exhibit significant negative abnormal returns.

scholarly journals Leverage and the wealth gains from acquisition program announcements

2010 ◽  
Vol 8 (1) ◽  
pp. 267-280
Author(s):  
Gurmeet Singh Bhabra ◽  
Harjeet S. Bhabra ◽  
Glenn W. Boyle
Keyword(s):  
Full Advantage ◽  
Stock Price ◽  
Market Reaction ◽  
Abnormal Returns ◽  
Tobin's Q ◽  
Price Reaction ◽  
Investment Opportunities ◽  
Stock Price Reaction ◽  
The Mean ◽  
Increasing Function

We examine the market reaction to announcements of an intention to pursue a program of external acquisitions. Although the mean gain is positive, only firms with high Tobin’s q and low leverage experience significant abnormal returns. For firms with low q or high leverage, abnormal returns are zero. Moreover, the stock price reaction is an increasing function of q only for firms with low leverage. These results are consistent with the view that high leverage reduces the ability of a firm to take full advantage of profitable investment opportunities.

scholarly journals The impact of dividend announcements on share price and trading volume

2018 ◽  
Vol 45 (2) ◽  
pp. 210-230 ◽  
Author(s):  
Razaz Felimban ◽  
Christos Floros ◽  
Ann-Ngoc Nguyen
Keyword(s):  
Stock Price ◽  
Trading Volume ◽  
High Growth ◽  
Good News ◽  
Share Price ◽  
Content Type ◽  
Dividend Announcements ◽  
Stock Price Reaction ◽  
Using Data ◽  
The Impact

Purpose The purpose of this paper is to investigate the stock market response to dividend announcements in high growth emerging markets of Gulf countries. Design/methodology/approach The sample includes 1,092 dividend announcements from 299 listed firms over the period 2010-2015. Findings In the environment where there is an absence of capital gain and income tax, the authors find some evidence for the stock price reaction that partly supports the signaling hypothesis. The findings show that the Gulf Cooperation Council (GCC) market is inefficient because of the leakage information before the announcement in bad news, and the delay of share price adjustment in good news. In addition, the authors report significant trading volume (TV) reaction in all the three announcements clusters, where dividends increase, decrease, and are constant, lending support to the hypothesis that the dividend change announcements have an impact on the TV response due to different investors’ preferences. Originality/value This is the first empirical paper on market reaction in share price and TV around dividend announcement using data for the majority of GCC countries.

A cross-country study on manipulations in financial statements of listed companies

2017 ◽  
Vol 24 (4) ◽  
pp. 656-677 ◽  
Author(s):  
Md Shamimul Hasan ◽  
Normah Omar ◽  
Paul Barnes ◽  
Morrison Handley-Schachler
Keyword(s):  
White Collar Crime ◽  
White Collar ◽  
Financial Statements ◽  
Listed Companies ◽  
Financial Statement ◽  
Content Type ◽  
Significant Difference ◽  
Cent Level ◽  
The Cost ◽  
National Difference

Purpose The purpose of this study is threefold: first, to detect trends in financial statement manipulation; second, to measure the level of manipulation and to measure the variation in manipulation between countries; and, third, to identify widely used techniques in financial statements manipulation. Design/methodology/approach This study uses financial data of listed companies from Asia, namely, Japan, Singapore, Malaysia, Indonesia, Thailand, Hong Kong and China. The study adopts financial ratios, financial forensic tool, dichotomous approach and statistical tools to analyze the data (84,000 observations) over a period of four years from 2010 to 2013. Findings The results show that 34 per cent of sample companies in selected Asian countries are involved in the manipulation of financial statements; the average level of manipulation (overall manipulation index) is 72 per cent; and there is a significant difference between countries at 5 per cent level. The study also identifies four most commonly used techniques, namely: days’ sales in receivable (DSRI), depreciation (DEPI), assets quality (AQI) and total accruals to total assets (TATA). Research limitations/implications Although this study found a significant national difference between countries in terms of practicing manipulation in financial statements, it did not address the issue of why some countries have higher level of manipulation and greater fluctuations in manipulation than others. Further study could be conducted to look for the reasons on these issues. Practical implications Investors and other stakeholders are advised to judge the manipulation in financial statements before fixing up for investment. At least they should examine Sales, Accounts Receivable, Depreciation, Value of Fixed Assets and Accruals data before accepting the financial statement in good faith. Social implications The trend of manipulation in financial statements is increasing day by day and that is why it needs to prevent to protect our society from white collar crime. The cost of white collar crime is much higher and key executives are making money at the expense of investors and other stakeholders. This kind of study creates awareness among stakeholders about the manipulation as well as provides techniques to examine the faithfulness of financial statements. Then, managers will not overstate or understate either revenues or expenses easily, as it can damage the goodwill. Originality/value This is the first study of its kind addressing measurement of manipulation score, overall manipulation index (OMI) and identification of widely used variables of manipulation in financial statements are new contributions towards existing literature of earnings manipulation.

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