Informed Trading and the Market Reaction to Accounting Restatements

2011 ◽  
Vol 86 (5) ◽  
pp. 1519-1547 ◽  
Author(s):  
Brad A Badertscher ◽  
S. Paul Hribar ◽  
Nicole Thorne Jenkins
Keyword(s):  
Insider Trading ◽  
Market Reaction ◽  
Informed Trading ◽  
Data Availability ◽  
Stock Repurchases ◽  
Reverse Causality ◽  
Accounting Restatements ◽  
Market Reactions ◽  
Trading Activities ◽  
The Difference

ABSTRACT We examine how informed trading activities affect the market reaction to accounting restatements. We find significantly less negative reactions to accounting restatements when managers are net purchasers of stock before the restatement, and significantly more negative market reactions when managers are net sellers. Similar patterns characterize corporate trading, where prior stock repurchases dampen negative reactions and prior equity issuances increase negative reactions to the restatement. We address the possibility of reverse causality in which informed trades are undertaken because of the expected market reaction by examining the difference between disclosed and non-disclosed trades, finding that the market reaction is concentrated in the disclosed trades. Our results are incremental to general return patterns associated with insider trading and corporate equity transactions, and hold after controlling for other determinants of the market reaction to restatements. Taken together, these findings suggest that investors use informed trading activities to help interpret and price accounting restatements. JEL Classifications: M41, M42. Data Availability: Data are publicly available from the sources identified in the study.

scholarly journals Market Reaction to Dividend Announcements During Pandemic: An Event Study

2021 ◽  
pp. 097226292110662
Author(s):  
Nisha Prakash ◽  
Yogesh L
Keyword(s):  
Stock Market ◽  
Event Study ◽  
Market Reaction ◽  
Stock Exchange ◽  
Abnormal Returns ◽  
Weak Form ◽  
Primary Objective ◽  
Market Reactions ◽  
The Difference ◽  
Stock Market Reactions

This study analyses the difference in stock market reactions to dividend announcement during the pandemic. The thirty constituent stocks of Sensex, the index of Bombay Stock Exchange (BSE), is used for analysis. This allows cross-industry comparison of the market reaction. The study examines stock market reactions covering 44 days around the dividend announcement dates. The primary objective of this study is to understand whether the price adjustment linked to the dividend announcement news during the pandemic was different from the earlier years. This empirical study employs the conventional event study methodology using abnormal returns (ARs) to examine the stock market reaction to dividend announcement. The market reaction to dividend announcement was increasingly positive during the pandemic, compared to previous years. The statistical pooled t-tests showed there was a significant relationship between the pandemic and ARs. The findings also indicate that the difference in the market reaction to dividend announcement was more prominent in services stocks than that in manufacturing. Further, the results also verify the weak-form of efficiency of Indian stock exchange.

scholarly journals DAMPAK UNDANG-UNDANG REPUBLIK INDONESIA NO.11 TAHUN 2016 TENTANG PENGAMPUNAN PAJAK TERHADAP KONDISI BURSA EFEK INDONESIA

2018 ◽  
pp. 217
Author(s):  
Magna Mayputra Sumadi ◽  
Luh Putu Wiagustini
Keyword(s):  
Abnormal Return ◽  
Market Reaction ◽  
Stock Exchange ◽  
Statistical Tests ◽  
Abnormal Returns ◽  
Market Reactions ◽  
Tax Amnesty ◽  
Average Abnormal Return ◽  
Before And After ◽  
The Difference

This study aims to analyze the difference of the mean significance of abnormal return before and after the event and to test the market reaction due to the tax amnesty event. This research uses a sample of 34 stocks of LQ45 in Indonesia Stock Exchange by using purposive sampling sampling method. This research is done by method of event study study with Market Adjusted Model. The period of the event examined for each event is 15 trading days, ie seven days before the event, one day at the time of the event and seven days after the event. The statistical tests were performed to compare average abnormal returns before and after events and to see market reactions around the event. The result of the research shows that there is no difference of average abnormal return before and after the event of tax amnesty policy, the end of the tax amnesty period I, the end of the tax amnesty period II and the end of the tax amnesty period III. There is no market reaction around the event of the tax amnesty policy, but there is market reaction in the event of the end of the tax amnesty period I, the event of the end of the second amnesty tax period and the end of the tax amnesty period III. The end of the tax amnesty period I, II and III contain information.

scholarly journals Perbandingan Reaksi Pasar pada Perusahaan LQ45 dan Non LQ45 atas Pengumuman Stock Split

2020 ◽  
Vol 30 (2) ◽  
pp. 307
Author(s):  
Kadek Wahyudi ◽  
I Nyoman Wijana Asmara Putra
Keyword(s):  
Abnormal Return ◽  
Market Reaction ◽  
Analytical Techniques ◽  
Market Reactions ◽  
Stock Split ◽  
Before And After ◽  
The Difference ◽  
Return Difference ◽  
A Company ◽  
Investor Reaction

Stock split announcements are believed to cause investor reaction. The LQ45 Index company that already has high liquidity in IDX is a stock split. This research aims to test the difference of the company's market reaction LQ45 before and after the stock split announcement, test the reaction difference of the non-LQ45 company market before and after the stock split announcement, and test the market reaction difference between LQ45 and non LQ45 companies on the stock split announcement. This research sample is a company that does stock split up during January 2007-July 2019. Market reactions are measured by abnormal return. The analytical techniques used are different tests. The results showed there was a reaction of the company's market LQ45 and non LQ45 on the stock split announcement, and there was a difference in market reaction between LQ45 and non-LQ45 companies over stock split announcements. Keywords: Stock Split; Abnormal Return Difference; Market Reaction.

Market Reactions to Transparency International Reports on Corporate Anti-Corruption

2016 ◽  
Vol 16 (1) ◽  
pp. 84-99 ◽  
Author(s):  
Renata Blanc ◽  
Dennis M. Patten ◽  
Manuel Castelo Branco
Keyword(s):  
Market Reaction ◽  
Market Reactions ◽  
Transparency International ◽  
Corporate Reporting ◽  
Environmental Domain ◽  
Country Level ◽  
Stakeholder Pressure ◽  
Political Cost ◽  
Time Periods ◽  
Environmental Events

ABSTRACT In this paper, we examine the investor response to the issuance of Transparency International's (TI) 2012 and 2014 Transparency in Corporate Reporting: Assessing the World's Largest Companies reports. Building on prior studies of political cost-inducing events in the environmental domain, we anticipate a negative market reaction, although we argue that the adjustment will be less severe for firms rated as having better anti-corruption disclosure. Focusing on a sample of U.S. companies to control for country-level effects and to allow for comparison with the prior environmental-themed studies, we document a significantly negative market reaction to the first TI report issuance. Although also negative, the market reaction to the 2014 report was not statistically significant. However, we also document that, as expected, market adjustments differ significantly across subgroups based on anti-corruption disclosure in both time periods. These results hold controlling for other factors potentially influencing investor perceptions of exposure to the report issuances. In general, our results are consistent with the prior studies and indicate that the market is savvy to political cost exposures arising from non-environmental events. The findings also suggest that TI's efforts may be increasing stakeholder pressure for corporate anti-corruption performance, but we caution that further investigation of the relation between disclosure and underlying performance in the corruption domain is warranted.

Market Reactions to a High-Quality Auditor and Managerial Preference for Audit Quality

2019 ◽  
Vol 38 (4) ◽  
pp. 131-149 ◽  
Author(s):  
Patrick J. Hurley ◽  
Brian W. Mayhew
Keyword(s):  
Loss Aversion ◽  
Audit Quality ◽  
Data Availability ◽  
Quality Competition ◽  
High Quality ◽  
Market Reactions ◽  
Comprehensive Theory ◽  
Audit Reports ◽  
The Impact ◽  
Quality Theory

SUMMARY We insert an automated high-quality (HQ) auditor into established experimental audit markets to test the impact of high-quality competition on other auditors' supply of and managers' demand for audit quality. Theory predicts that managers will demand high levels of audit quality to avoid investors' price-protecting behavior. This demand should result in the HQ auditor dominating the market and increase other auditors' audit quality provision to compete with the HQ auditor. However, we find that the HQ auditor does not dominate the market—despite holding audit costs constant and investors placing a premium on HQ auditor reports. We also find that adding an HQ auditor results in other auditors lowering audit quality. Additional analyses indicate some managers demand lower audit quality to avoid negative audit reports, consistent with loss aversion as a potential explanation. Our findings indicate a need to develop a more comprehensive theory of the demand for auditing. Data Availability: The laboratory market data used in this study are available from the authors upon request.

A Modified CGM Algorithm Enhances Data Availability While Retaining iCGM Performance

2021 ◽  
pp. 193229682110075
Author(s):  
Rebecca A. Harvey Towers ◽  
Xiaohe Zhang ◽  
Rasoul Yousefi ◽  
Ghazaleh Esmaili ◽  
Liang Wang ◽  
...  
Keyword(s):  
Data Integration ◽  
Patient Experience ◽  
Real World ◽  
Data Availability ◽  
Post Processing ◽  
Sensor Error ◽  
The Mean ◽  
The Difference ◽  
Data Gap ◽  
Improve Patient

The algorithm for the Dexcom G6 CGM System was enhanced to retain accuracy while reducing the frequency and duration of sensor error. The new algorithm was evaluated by post-processing raw signals collected from G6 pivotal trials (NCT02880267) and by assessing the difference in data availability after a limited, real-world launch. Accuracy was comparable with the new algorithm—the overall %20/20 was 91.7% before and 91.8% after the algorithm modification; MARD was unchanged. The mean data gap due to sensor error nearly halved and total time spent in sensor error decreased by 59%. A limited field launch showed similar results, with a 43% decrease in total time spent in sensor error. Increased data availability may improve patient experience and CGM data integration into insulin delivery systems.

Changes in Market Response to Stock Repurchases during the COVID-19 Crisis

2021 ◽  
Vol 50 (4) ◽  
pp. 411-437
Author(s):  
Kyung Hee Park
Keyword(s):  
Stock Prices ◽  
Market Reaction ◽  
Listed Companies ◽  
Shareholder Wealth ◽  
Stock Repurchases ◽  
Market Response ◽  
Stock Repurchase ◽  
South Korean ◽  
The Impact ◽  
A Company

This study analyzed the impact of COVID-19, which, in 2020, globally increased uncertainty about the stock repurchase of South Korean listed companies. The results suggest that the market reaction to stock repurchases during the COVID-19 period was significantly subdued. In particular, the market reaction to KOSPI companies, on stock repurchase, was positive, while it was negative in the case of KOSDAQ companies. It has also been reported that the market ranks lower on the reliability of the signal after the onset of COVID-19. This means that if a company discloses a stock repurchase in a situation where the value of the market as a whole has declined, it cannot be accepted as an undervalued signal. Furthermore, it was revealed that the market responded more positively to the announcement of repurchases by companies that had actively managed shareholder wealth by repeatedly making stock repurchases before COVID-19. These results suggest that companies should always be aware of this, as the market response to stock repurchases in market shockers such as COVID-19 is weaker. Additionally, managers can manage their stock prices more effectively through stock repurchases during market shockers if they consistently manage their stock prices through stock repurchases when companies are undervalued.

Legal Insider Trading and Stock Market Reaction

2008 ◽  
pp. 385-402
Author(s):  
Ilham Riachi ◽  
Eric de Bodt ◽  
Nihat Aktas ◽  
Jan de Smedt
Keyword(s):  
Stock Market ◽  
Insider Trading ◽  
Market Reaction ◽  
Stock Market Reaction

scholarly journals Financial Ratios, Economic Value Added and Market Reaction: A Quantitative Study on Indonesia Stock Exchange

2020 ◽  
Vol 7 (2) ◽  
pp. 82-91
Author(s):  
Indrawan Azis ◽  
Dara Ayu Nianty ◽  
Andi Marlinah
Keyword(s):  
Market Reaction ◽  
Stock Exchange ◽  
Economic Value ◽  
Value Added ◽  
Secondary Data ◽  
Partial Least Square ◽  
Least Square ◽  
Economic Value Added ◽  
Manufacturing Companies ◽  
Market Reactions

Reflecting on the phenomenon of stock market movements on the Indonesia Stock Exchange, this study was appointed to examine the effect of the effect of liquidity, solvency, and Economic Value Added (EVA) on market reactions in manufacturing companies listed on the IDX. The research method uses a quantitative approach, and types are categorized in explanatory research. The population in this study is manufacturing companies listed on the Indonesia Stock Exchange in the period 2017-2019. Determination of the sample to be tested in this study using a purposive sampling method and obtained 36 companies. Secondary data were obtained from the Capital Market Information Center (PIPM) the Indonesia Stock Exchange (IDX). The analytical method is Partial Least Square (PLS) with the assistant of SmartPLS 3.0 software. The results of the study showed that all exogenous variables positively and significantly influenced endogenous variable (EVA and Market Reaction). Research findings enrich previous studies on understanding market reactions and their impact on the development of corporate financial strategies in Indonesia.

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