CEOs'/CFOs' Swearing by the Numbers: Does It Impact Share Price of the Firm?

2006 ◽  
Vol 81 (1) ◽  
pp. 1-27 ◽  
Author(s):  
Hsihui Chang ◽  
Jengfang Chen ◽  
Woody M. Liao ◽  
Birendra K. Mishra
Keyword(s):  
Information Asymmetry ◽  
Stock Price ◽  
Abnormal Returns ◽  
Financial Statements ◽  
Share Price ◽  
Revenue Recognition ◽  
Cross Sectional ◽  
Share Prices ◽  
The Impact ◽  
Bid Ask Spreads

We examine the impact on share prices of firms whose CEOs and CFOs certify their financial statements under oath, pursuant to the administrative order issued by the SEC on June 27, 2002. We hypothesize that (1) the certification provides assurance to investors by making disclosure more credible and by reducing information asymmetry between owners and management, and (2) the assurance value of certification is reflected in the stock price of the certifying company. Overall, the empirical results are consistent with our hypotheses. We observe, on average, positive abnormal returns for firms whose CEOs/CFOs certified their financial statements by August 14, 2002. Based on an analysis of bid-ask spreads, certifying firms experienced a significant decline in information asymmetry after certification. In cross-sectional analyses, we find abnormal returns are positively associated with firms that were under investigation, that used Andersen as their auditor, and that practiced aggressive revenue recognition.

How does capital market respond to Certified Emission Reductions (CERs) announcements in India

2019 ◽  
Vol 45 (7) ◽  
pp. 950-965 ◽  
Author(s):  
Praveen Kumar ◽  
Mohammad Firoz
Keyword(s):  
Event Study ◽  
Stock Prices ◽  
Abnormal Returns ◽  
Share Price ◽  
Emission Reductions ◽  
Content Type ◽  
Share Prices ◽  
The Mean ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this paper is to analyze the relationship between Certified Emission Reductions (CERs) information and a firm’s stock prices. Design/methodology/approach The present study is based on 193 CERs announcements by Indian firms over a 13-year period 2005–2017. The event study methodology is used to examine the impact of CERs announcements on a firm’s share prices. Findings The study suggests that the issuance of CERs did not produce any significant abnormal return. More specifically, the outcomes of event study shows that over a two-day event window from the event day to the day after the event (i.e. days 0 to 1), the mean and median of AARs are −0.25 and −0.34 percent, respectively. The abnormal returns on day 1 are not statistically significant as per the t-test. Moreover, the mean and median of abnormal returns after one day (−1) are negative, indicating that investors react negatively to CERs announcements. However, the mean and median of CAARs over both the two-day (i.e. days −1 to 0 and days 0 to +1) and three-day (i.e. days −1 to +1) event windows are positive, but not statistically significant based on the t-test. Research limitations/implications The findings of the study are quite comprehensive, relatively used only market-based criteria of a firm’s financial performance, e.g., share price, at times, inhibits generalizing the results. Originality/value To the best of the author’s knowledge, the present study is a first of its kind to investigate the relationship between the CERs information and a firm’s stock prices.

scholarly journals On the Impact of Dividend Payments on Stock Prices - an Empirical Analysis of the German Stock Market

2021 ◽  
Vol 16 (1) ◽  
pp. 255-269
Author(s):  
Konstantin Melching ◽  
Tristan Nguyen
Keyword(s):  
Stock Prices ◽  
Stock Price ◽  
Signaling Theory ◽  
Share Price ◽  
Dividend Payment ◽  
Share Prices ◽  
Dividend Payments ◽  
Time Period ◽  
German Stock ◽  
The Impact

Abstract This paper examines the relation between dividend payments and stock prices of all firms in the German prime standard DAX 30 in the time period from 2012 to 2019. The irrelevance theory introduced by Miller and Modigliani states that dividend payments must not have an impact on stock prices in a perfect market. In contrast, the signaling theory and the dividend puzzle indicate that dividend payments are likely to have a profound impact on the stock price. According to our findings the ex-dividend decrease of stock prices was significantly smaller than the dividend payment. Nevertheless, the results support the impact of the dividend payment on the share price. Firstly, the existence of the ex-dividend markdown is a proof that dividend payments cause share price losses. Secondly, the study explains in particular that high dividend payments result in high share prices over the examined period. Thirdly, our analysis demonstrates a positive correlation between the dividend and the stock price development according to the signaling theory. Considering the above- mentioned results, we can conclude that the share price of a company is highly affected by the decision making of the company regarding the dividend policy.

scholarly journals Stock price reactions to information about top managers

2021 ◽  
Vol 16 (2) ◽  
pp. 159-169
Author(s):  
Lai Cao Mai Phuong
Keyword(s):  
Board Of Directors ◽  
Stock Price ◽  
Abnormal Return ◽  
Abnormal Returns ◽  
Chief Executive ◽  
Share Prices ◽  
Cumulative Abnormal Returns ◽  
Top Managers ◽  
The Board Of Directors ◽  
The Impact

This article uses an event study to investigate the response of a bank’s stock price to information related to these banks’ top managers. In the first event, the Vice Chairman of the founding board of Asia Commercial Bank (ACB) was arrested and the Chief Executive Officer (CEO) of this bank was summoned by the police for questioning. The second event related to the immediate resignation of the Chairman of the Board of Directors of Sacombank (STB) after he received a summons from the investigating police agency. Both of these events happened in Vietnam. The research results showed that unanticipated events (the first event) caused the share prices of both banks to react more strongly, and the impact time was longer than the second event. The first event resulted in the cumulative abnormal returns of ACB and STB being –23.6% and –9.1%. The second event has been found to be directly related to STB, but does not significantly affect this stock, but has a significant effect on the abnormal return of ACB (AR (1) = –4.6%). Asymmetric information, inattention and investor fear of event-related losses may explain this phenomenon.

scholarly journals On the Stock Market's Reaction to Major Railroad Accidents

2010 ◽  
Author(s):  
Thomas J. Walker ◽  
Kuntara Pukthuanthong ◽  
Sergey S. Barabanov
Keyword(s):  
Stock Price ◽  
Abnormal Returns ◽  
Publicly Traded ◽  
Cross Sectional ◽  
Illegal Behavior ◽  
Price Performance ◽  
Study Methodology ◽  
Main Determinants ◽  
Abnormal Performance ◽  
The Impact

This study examines the impact of train accidents on the stock price performance of the involved railroad companies. We employ a sample of 26 accidents involving trains operated by publicly traded U.S. and Canadian railroad companies between January 1993 and December 2003. Event study methodology is used to measure the abnormal performance of the involved railroad firms to these accidents. In addition, a series of univariate tests and cross-sectional regression analysis is employed to determine the factors that drive the abnormal returns for the firms in the sample. The magnitude of the initial price decline appears to be driven by various characteristics of both the firm and the accident itself. Specifically, there is strong evidence that suggests that one of the main determinants of the abnormal returns is expected legal liability claims against the railroads. Abnormal performance is negatively related to firm size and the number of injuries and fatalities resulting from the accident. In addition, accidents that result in hazardous material spills cause significantly larger stock price drops in the days following the event. Finally, investors appear to differentiate between accident causes. Accidents caused by reckless or illegal behavior on behalf of one or more of the railroad company's employees result in particularly large price declines. Accidents caused by mechanical failures or signal malfunctions, on the other hand, only cause small stock price drops.

scholarly journals The Impact of Divestment Announcements on the Share Price of Fossil Fuel Stocks

2019 ◽  
Vol 11 (11) ◽  
pp. 3122 ◽  
Author(s):  
Truzaar Dordi ◽  
Olaf Weber
Keyword(s):  
Stock Prices ◽  
Fossil Fuel ◽  
Statistical Tests ◽  
Price Change ◽  
Abnormal Returns ◽  
Efficient Market Hypothesis ◽  
Share Price ◽  
Short Term ◽  
Share Prices ◽  
The Impact

Several prominent institutional investors concerned about climate change have announced their intention or have divested from fossil fuel shares, to limit their exposure to the industry. The act of fossil fuel divestment may directly depress share prices or stigmatize the industry’s reputation, resulting in lower share value. While there has been considerable research conducted on the performance of the fossil fuel industry, there is not yet any empirical evidence that divestment announcements influence share prices. Adopting an event study methodology, this study measures abnormal deviations in stock prices of the top 200 global oil, gas, and coal companies by proven reserves, on days of prominent divestment announcements. Events are analyzed independently and in aggregate. The results make several notable contributions. While many events experienced short-term negative abnormal returns around the event day, the effects of events were more pronounced over longer event windows following the New York Climate March, suggesting a shift in investor perception. The results also find that divestment announcements related to campaigns, pledges, and endorsements all have a significant effect over the short-term event window. Finally, the results control for the general underperformance of the industry over the estimation window, attesting that the price change is caused by divestment announcements. Several robustness tests using alternate expected returns models and statistical tests were conducted to ensure the accuracy of the result. Overall, this study finds that divestment announcements decrease the share price of the fossil fuel companies, and thus, we conclude that ‘divestors’ can influence the share price of their target companies. Theoretically, the result adds new knowledge regarding the efficacy of the efficient market hypothesis in relation to divestment.

The intra business group effects of alliance network extensions

2016 ◽  
Vol 54 (6) ◽  
pp. 1420-1442 ◽  
Author(s):  
I-Fen Chen ◽  
Shao-Chi Chang
Keyword(s):  
Strategic Alliances ◽  
Business Groups ◽  
Abnormal Returns ◽  
Business Group ◽  
Ordinary Least Squares ◽  
Network Effect ◽  
Share Price ◽  
Cross Sectional ◽  
Content Type ◽  
The Impact

Purpose – The purpose of this paper is to better understand the influence of business group membership by exploring how actions by a member firm influence other firms in the business group. Specifically, the authors ask two questions in this study: when a member firm forms strategic alliances with partners outside of the business group, how does the alliance influence other members in the business group? Moreover, which types of member firms are more affected than others? Design/methodology/approach – The authors employ standard event-study methodology to examine the stock price responses for the focal and member firms on the announcement of an alliance. Moreover, the authors employ the cross-sectional regression analyses to test hypotheses concerning the impact of alliance, group, and firm characteristics on the cumulative abnormal returns of non-announcing members. All regressions are estimated using ordinary least squares. Findings – The results show that, on average, alliance-announcing member firms experience significantly positive share price responses to announcements of strategic alliances. Moreover, the impact of alliance formation spillover to other non-announcing members in the business group. The authors also find that the influences on the non-announcing members are dissimilar. The non-announcing members are more strongly affected when they are in different industries from the non-member partner, and when the ownership of the business group is more concentrated. Originality/value – This study is to extend the resource complementarities perspective, which may help firms to more effectively configure their network portfolios in order to develop synergies among related network resources. The study thus extends the alliance portfolio literature to the literature on business groups. Since the inter-firm networks within business groups are more complex than those in alliance portfolios, the authors are able to study how the structure of a business, such as ownership concentration, can influence the intra-network effect.

scholarly journals Dampak Penerapan PSBB Covid-19 dan Harga Saham LQ-45 di Bursa Efek Indonesia (BEI)

2021 ◽  
Vol 4 (2) ◽  
pp. 149
Author(s):  
Putry Jecuinna ◽  
Ariel Zielma
Keyword(s):  
Comparative Study ◽  
Stock Price ◽  
Share Price ◽  
Lower Percentage ◽  
Second Phase ◽  
Share Prices ◽  
Wait And See ◽  
The Government ◽  
The Impact ◽  
To Receive

AbstrakTujuan penelitian ini yang telah dibahas untuk mengkaji dampak pandemi Covid-19 dan PSBB pada perkembangan pasar modal di Indonesia khususnya LQ-45.Metode penelitian yang digunakan dalam penelitian ini adalah kualitatif. Penelitian kualitatif bertujuan untuk memperoleh gambaran yang lengkap tentang berbagai hal berdasarkan perspektif manusia. Penelitian ini adalah penelitian yang bersifat komparatif. Penelitian dengan menggunakan studi perbandingan (comparative study) dilakukan dengan cara membandingkan persamaan dan perbedaan. PSBB tahap pertama dilakukan Maret 2020 berdampak pada penurunan harga saham, dimana pemegang saham melakukan panic selling. PSBB tahap pertama kurang efektif dengan meningkatnya kasus positif di Indonesia, maka pemerintah menerapkan PSBB tahap kedua. Dalam kondisi ini pemegang shaam lebih siap dalam menerima informasi tersebut. Pemegang saham dalam menghadapi situasi ini saham mengambil sikap wait and see. Harga saham mengalami penurunan namun dengan presentase yang lebih rendah dibandingkan dengan PSBB tahap pertama. Kata kunci: Covid-19, harga saham, LQ-45, PSBBAbstractThe purpose of this research which has been discussed is to examine the impact of the Covid-19 pandemic and Pembatasan Sosial Skala Besar (PSBB) on the development of the capital market in Indonesia, especially LQ-45. The research method used in this research is qualitative. Qualitative research aims to obtain a complete picture of various things from a human perspective. This research is a comparative research. Research using a comparative study is performed by comparing the similarities and differences. The first phase of the PSBB was carried out in March 2020, impacts on the decline in share prices, which shareholders conducted panic selling. The first phase of the PSBB was less effective as the increasing number of positive cases in Indonesia, so the government implemented the second phase of the PSBB. In this condition, the shareholders are better prepared to receive the information. Shareholders in dealing with this situation took a wait and see attitude. The share price has decreased with a lower percentage compared to the first phase of the PSBB..Keywords: Covid-19, Stock Price, LQ-45, PSBB

scholarly journals Impact of Dividend Policy on Share Price of Commercial Bank in Nepal

2018 ◽  
Vol 3 ◽  
pp. 107-122
Author(s):  
Raj Kumar Baral ◽  
Ajay Pradhan
Keyword(s):  
Commercial Bank ◽  
Commercial Banks ◽  
Stock Price ◽  
Dividend Policy ◽  
Positive Influence ◽  
Share Price ◽  
Rank Test ◽  
Cross Sectional ◽  
Signed Rank Test ◽  
The Impact

The purpose of this study is to examine the impact of dividend policy on the share price of commercial bank in Nepal. The study is based on pooled cross sectional data of 10 commercial banks. Banks were selected on the basis of their performance on stock market of Nepal, i.e. top gainers and top losers and data are collected from Nepalese commercial banks listed in NEPSE from the F/Y 2012/13 to F/Y 2016/17. The paper investigates the relationship between dividend announcement, EPS, P/E ratio, DPR, on stock price by using Descriptive Statistics, Correlation and Regression, ANOVA and Wilcoxon Signed Rank Test. The articles conclude that except DPR, the other factors like EPS, P/E ratio have positive relationship with stock price among them P/E is the strongest factor that affects the share price in case of top gainer commercial banks whereas EPS, P/E ratio and DPR have positive influence on stock price among them DPR is the strongest factor that affects the share price in case of top loser bank.

scholarly journals The Impact Of Forced Financial Restatements On The Share Prices Of JSE Listed Firms

2012 ◽  
Vol 11 (12) ◽  
pp. 1383
Author(s):  
Shaun Watson ◽  
Johan Coetzee
Keyword(s):  
Stock Exchange ◽  
Abnormal Returns ◽  
Share Price ◽  
Share Prices ◽  
Listed Firms ◽  
Price Reaction ◽  
Johannesburg Stock Exchange ◽  
Financial Restatements ◽  
Panel Review ◽  
The Impact

This study investigates the effect of forced financial restatements on the share prices listed on the Johannesburg Stock Exchange (JSE). An event study methodology is used to examine the share price reaction of 34 firms that forcefully restated their results following a GAAP Monitoring Panel review. The results indicate that the equity of 79.1 per cent of the firms decreased as a result of the restatement. The average standardised abnormal returns for 55.9 per cent of these firms were also found to be negative. The study further finds that the volume of shares traded directly following the announcement increased substantially, especially five days following the announcement. The study makes a contribution to the existing literature in that is the first of its kind to focus on the share price reaction of forced financial restatements on share prices in the South African context.

scholarly journals INVESTOR SENTIMENT AROUND BUYBACK IN INDIAN STOCK MARKET

2020 ◽  
pp. 35-43
Author(s):  
Varsha P ◽  
Nithin Jose
Keyword(s):  
Stock Price ◽  
Abnormal Returns ◽  
Investor Sentiment ◽  
Share Price ◽  
The Public ◽  
Public Announcement ◽  
Earnings Per Share ◽  
Valuation Effect ◽  
Indian Stock Market ◽  
The Impact

While Buyback helps companies to invest in themselves by reducing the number of outstanding shares in the market, it increases the investor sentiment with respect to the company as the investors expect an increased Earnings Per Share, When the Earnings Per Share increases, the market react positively and shares prices will increase. This study attempts to examine the significance of stock price behavior around the public announcement of buyback. The effect of public announcement is studied by analyzing the behavior of abnormal returns of ten companies, which made buyback announcement during the financial year 2018–19. The companies were selected from securities exchange board of India (SEBI) and National Securities Exchange (NSE) website that portrays the public announcement of all such companies. This is an event study which attempts to measure the valuation effect of a corporate event, namely public announcement of buyback by examining the response of the stock price around the announcement of the event. To test the impact of public announcement Abnormal Returns (AR) and Cumulative Abnormal Returns (CAR) are computed. The study concludes that the buyback announcement does not have any significant impact on the share price. KEYWORDS: Buyback, CAR, Abnormal Returns, Investor sentiment

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