Market Reactions to Disclosure of Reportable Events

2003 ◽  
Vol 22 (1) ◽  
pp. 181-194 ◽  
Author(s):  
J. Scott Whisenant ◽  
Srinivasan Sankaraguruswamy ◽  
K. Raghunandan
Keyword(s):  
Information Content ◽  
Internal Control ◽  
Stock Prices ◽  
Stock Price ◽  
Financial Statement ◽  
Expected Returns ◽  
Differential Information ◽  
Cumulative Abnormal Return ◽  
Market Reactions ◽  
Interim Period

This study investigates the information content of FRR No. 31 reportable events (SEC 1988) communicated by auditors to clients in the two fiscal years and interim period preceding auditor changes. Reportable events identify weaknesses in internal control and problems related to the reliability of management representations and/or financial statement reliability. We examine 1,264 auditor changes (with available stock price data) over the period 1993 to 1996, including 118 companies with reportable events. Our findings suggest that reportable events disclosed in Form 8-K filings of auditor changes are considered by investors to have information content. We find a −2.75 percent (−5.53 percent) cumulative abnormal return over a three-day (seven-day) announcement period surrounding the disclosure of reportable events in Form 8-K filings. The conclusion that reportable events offer useful information to investors is robust to alternative specifications of expected returns and to controls for other disclosures (resignations and disagreements) made when auditor changes occur. Further tests also highlight differential information content among the types of reportable events. Specifically, stock prices act as if investors find reportable events about reliability issues more informative than reportable events about internal control weaknesses.

Market reactions to the inclusion of people with disabilities

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Claudia Araceli Hernández González
Keyword(s):  
Event Study ◽  
Stock Prices ◽  
Stock Price ◽  
Abnormal Returns ◽  
People With Disabilities ◽  
Market Reactions ◽  
Content Type ◽  
Study Methodology ◽  
Research Advance ◽  
The Impact

PurposeThis study aims to provide evidence of market reactions to organizations' inclusion of people with disabilities. Cases from financial journals in 1989–2014 were used to analyze the impact of actions taken by organizations to include or discriminate people with disabilities in terms of the companies' stock prices.Design/methodology/approachThis research is conducted as an event study where the disclosure of information on an organization's actions toward people with disabilities is expected to impact the organization's stock price. The window of the event was set as (−1, +1) days. Stock prices were analyzed to detect abnormal returns during this period.FindingsResults support the hypotheses that investors value inclusion and reject discrimination. Furthermore, the impact of negative actions is immediate, whereas the impact of positive actions requires at least an additional day to influence the firm's stock price. Some differences among the categories were found; for instance, employment and customer events were significantly more important to a firm's stock price than philanthropic actions. It was observed that philanthropic events produce negative abnormal returns on average.Originality/valueThe event study methodology provides a different perspective to practices in organizations regarding people with disabilities. Moreover, the findings in this research advance the literature by highlighting that organizations should consider policies and practices that include people with disabilities.

The effect of the imposition of a public reprimand on the stock price of companies in Malaysia

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Emie Famieza Zainudin ◽  
Hafiza Aishah Hashim ◽  
Shahnaz Ismail
Keyword(s):  
Stock Prices ◽  
Stock Price ◽  
Design Methodology ◽  
Negative Impact ◽  
Abnormal Returns ◽  
Investment Decisions ◽  
Market Model ◽  
Market Reactions ◽  
Content Type ◽  
A Company

Purpose This paper aims to examine the effect of the imposition of public reprimands on the underlying stock prices of companies in Malaysia. Design/methodology/approach Data on 148 companies that received public reprimands during the period from 2007 to 2013 were collected from the Bursa Malaysia website to analyse the market reactions to the imposition of public reprimands. Findings Based on a market model of abnormal returns, the empirical result showed that the imposition of a public reprimand had a negative impact on a company’s stock price. Moreover, when a market model of average abnormal returns (AAR) was used, the result indicated that companies that had received a public reprimand had a negative AAR value. Research limitations/implications The findings from this study have implications for shareholders in making their investment decisions because they can switch their investments to other companies and markets after a company in which they are interested or have made an investment has received a public reprimand. Originality/value There is limited research on the imposition of public reprimands and the effect that it has on companies in developing countries. Hence, this study contributes to research in this area by providing evidence on the effect of public reprimand on stock price reactions in the context of a developing country, namely, Malaysia.

Synergy between Accounting Disclosures and Forward-Looking Information in Stock Prices

2016 ◽  
Vol 92 (2) ◽  
pp. 1-17 ◽  
Author(s):  
Anil Arya ◽  
Brian Mittendorf ◽  
Ram N. V. Ramanan
Keyword(s):  
Stock Prices ◽  
Stock Price ◽  
Relevant Information ◽  
Market Reactions ◽  
Firm Strategies ◽  
Accounting Disclosures ◽  
Stock Price Reaction ◽  
Accounting Reports ◽  
Stock Market Reactions ◽  
Forward Looking

ABSTRACT It is well recognized that stock prices provide relevant feedback that can guide future firm decisions. This paper develops a model to examine how accounting disclosures affect the decision-usefulness of such stock market reactions. We demonstrate that information in accounting reports can prove useful because it helps observers better interpret and isolate the decision-relevant information embedded in the ensuing stock price reaction. This leads to natural synergies between accounting reports and stock prices in directing firm strategies—the more forward-looking information that can potentially be gleaned from stock prices, the more the firm will invest in improving precision of accounting disclosures even when such disclosures pertain to unrelated current activities.

scholarly journals Stock market reactions to the Japanese Sarbanes-Oxley act of 2006

2009 ◽  
Vol 7 (2) ◽  
pp. 126-136 ◽  
Author(s):  
Kosuke Seino ◽  
Fumiko Takeda
Keyword(s):  
Stock Market ◽  
Stock Prices ◽  
Stock Price ◽  
High Ratio ◽  
Corporate Accountability ◽  
Market Reactions ◽  
Sarbanes Oxley ◽  
Price Reactions ◽  
Stock Price Reactions ◽  
Stock Market Reactions

This article investigates stock market reactions to announcements related to the introduction of the Financial Instruments and Exchange Law or the so-called Japanese Sarbanes-Oxley Act (J-SOX), which was enacted to reinforce corporate accountability and responsibility. We find that the announcements leading to the passage of the J-SOX raised stock prices of firms listed on the First Section of the Tokyo Stock Exchange. Another finding is that firms with a high ratio of foreign shareholders or leverage experienced more positive stock price reactions. By contrast, whether the firm was audited by Big 4 audit firms did not seem to matter to investors. In addition, large firms tended to have more negative stock price reactions than small firms.

scholarly journals PENGARUH INTELEKTUAL KAPITAL TERHADAP KINERJA KEUANGAN PADA PERUSAHAAN SECTOR PERBANKAN YANG TERDAFTAR DI BURSA EFEK JAKARTA PERIODE 2008-2012

AdBispreneur ◽  
2017 ◽  
Vol 1 (3) ◽  
Author(s):  
Jauhar Arifin
Keyword(s):  
Financial Performance ◽  
Intellectual Capital ◽  
Stock Prices ◽  
Stock Price ◽  
Historical Data ◽  
Stock Exchange ◽  
Financial Statements ◽  
Component Analysis ◽  
Financial Statement ◽  
Postal Code

THE INFLUENCE OF INTELLECTUAL CAPITAL ON FINANCIAL PERFORMANCE OF BANK SECTOR COMPANIES LISTED AT JAKARTA STOCK EXCHANGEIN PERIOD 2008-2012 Jauhar ArifinSTIA Tabalong Kalimantan Selatan, Indonesia, Postal Code 71571Email: [email protected] ABSTRACT The unit of analysis in this study is bank sector companies listed at Jakarta Indonesia Stock Exchange in period 2008-2012. This unit data is represented by the audited company's financial statements and historical data of stock prices in Indonesia Stock Exchange. Financial statement data and historical data of the company's stock price used are from the year of 2008 to 2012. Companies sampled in the study only companies which meet the sampling criteria as many as 26 x 5 = 130 companies. Data analysis is Generalized Structured Component Analysis (GSCA). Result of research indicates that Intellectual Capital significantly influences Financial Performance.   Keywords: intellectual capital, financial performance    PENGARUH INTELEKTUAL KAPITAL TERHADAP KINERJA KEUANGAN PADA PERUSAHAAN SECTOR PERBANKAN YANG TERDAFTAR DI BURSA EFEK JAKARTA PERIODE 2008-2012 ABSTRAK Unit analisis pada penelitian ini adalah perusahaan sektor perbankan yang terdaftar di Bursa Efek Jakarta Periode 2008-2012. Data penelitian ini bersumber dari laporan keuangan yang telah diaudit dan data historis harga saham di Bursa Efek Indonesia. Data keuangan dan data historis harga saham perusahaan yang digunakan adalah dari tahun 2008 sampai 2012. Perusahaan sampel dalam penelitian ini hanya perusahaan yang memenuhi kriteria sampling sebanyak 26 x 5 = 130 perusahaan. Analisis data adalah Generalized structural component analysis (GSCA). Hasil penelitian menunjukkan bahwa intelektual kapital secara signifikan berpengaruh terhadap kinerja keuangan. Kata kunci:  intelektual kapital, kinerja keuangan 

scholarly journals RASIO PASAR, PROFITABILITAS DAN LIKUIDITAS BERPENGARUH TERHADAP HARGA SAHAM PADA PERUSAHAAN OTOMOTIF DAN KOMPONEN

2020 ◽  
Vol 9 (6) ◽  
pp. 2167
Author(s):  
Ni Kadek Anggun Pramesthi Dewi Sujata ◽  
Ida Bagus Badjra
Keyword(s):  
Stock Prices ◽  
Stock Price ◽  
Stock Exchange ◽  
Participant Observation ◽  
Total Sample ◽  
Financial Statement ◽  
Upward Movement ◽  
Sampled Data ◽  
Share Prices ◽  
Observation Methods

Share prices are very important for companies because stock prices are one of the main reasons underlying investors to buy shares as a form of investment in the company. A company's stock price always experiences up or down movements. This upward movement in stock prices can provide benefits for investors. The purpose of this study is to analyze the significance of the effect of Market Ratio, Profitability and Liquidity on stock prices. This research was conducted at Automotive and Component Companies listed on the Indonesia Stock Exchange (BEI) 2016-2018 period. The total sample of this research is 13 companies, with saturated sampling method that is all populations are sampled. Data collection is done by non-participant observation methods, namely through financial statement data published on www.idx.co.id. The results of this study found that Market, Profitability and Liquidity Ratios have a significant effect on stock prices. Keywords: Market Ratios, Profitability, Liquidity and Stock Prices

Pengaruh Rasio Keuangan terhadap Perubahan Harga Saham

2006 ◽  
Vol 1 (1) ◽  
pp. 106
Author(s):  
Umi Murtini ◽  
Shinta Mareta
Keyword(s):  
Stock Prices ◽  
Stock Price ◽  
Investment Decision ◽  
Profit Margin ◽  
Financial Statement ◽  
Return On Assets ◽  
Stock Investment ◽  
Investment Decision Making ◽  
Net Profit ◽  
Equity Ratio

One factor that supports investors' trust on capital market istheir perception to the fiuingness of stock price. The more appropriate and quicker the information reflected by stock price delivered to investors, the more fficient the stock market. fhe information needed from the firm's financial statement if it's tooked from investor needs who would purchase a stock are stock price information, earning per sltare, total asset, earning after tax, net sale, total liabitity, and totat equity which is used to the company financing source. This research aims toexamine the effect of Price Earning Ratio (PER), Return on Assets (RoA), Net Profit Margin (NPM), Debt Equity Ratio (DER) changes to stock price changes either partially or simultaneously. This research proves that Price Earning ratio (PER) and Net Profit Margin (NpM) changes partially influence the change of stock price, whereas those four variables simultaneously influence the change of stock price. Thisresearch hopefully could give benefits to investors, emitens, and other partles as additional evaluating tools in the relation with the process of stock investment decision making when stock prices are fluctuative. This research is hopefully beneficial for emitens in making a wisdom relating to PER, RoA, NPM, and DER and can give additional lorcwledge and information for parties who need reference as well as literqture about financial management.Keywords: closing price, EAT, PER, DER, NPM, ROA

The Economic Worth of Product Placement in Prime-time Television Shows

2016 ◽  
Vol 58 (2) ◽  
pp. 253-275
Author(s):  
Genevieve Begy ◽  
Vishal Talwar
Keyword(s):  
Stock Prices ◽  
Stock Price ◽  
Abnormal Return ◽  
Product Placement ◽  
Prime Time ◽  
Cumulative Abnormal Return ◽  
Cross Sectional ◽  
Television Shows ◽  
Economic Worth ◽  
Sectional Analysis

Product placement is fiercely being courted by firms as a consequence of the declining credibility of traditional broadcast advertising and the ‘30-second spot’. Very little research analysing its economic worth exists outside of the realm of film, however. This paper responds by applying a consistent measure of placement effectiveness to television through use of event analyses. It finds a mean cumulative abnormal return of 0. 79% in a sample of 264 placements from the 2011-12 prime-time season, confirming that product placement in television is positively and significantly associated with movement in firms' stock prices. Placement in a season premiere has significantly higher mean returns than in a non-pivotal episode, irrespective of whether the firm places the product in both episodes. A cross-sectional analysis of placement, episode and show factors suggests that the duration of placement and one-hour show length are positively associated with stock price movement. Placement in a show's debut season is adversely associated to worth.

Environmental Information and Market Reactions to Environmental Legislation

1997 ◽  
Vol 12 (2) ◽  
pp. 149-178 ◽  
Author(s):  
Walter G. Blacconiere ◽  
W. Dana Northcut
Keyword(s):  
Stock Price ◽  
Value Relevance ◽  
Environmental Information ◽  
Environmental Data ◽  
Financial Statement ◽  
Environmental Legislation ◽  
Market Reactions ◽  
Incremental Value ◽  
Environmental Disclosures ◽  
Primary Contribution

Environmental issues have attracted national attention and are becoming a focus at many firms. This paper examines the relation between stock price reactions to the Superfund Amendments and Reauthorization Act (SARA) of 1986 and environmental information. We include alternative information sources in a test of the value relevance of environmental data. We find some evidence that chemical firms with more extensive environmental disclosures included in their 10-K reports had a less negative reaction to SARA, while firms with greater exposure to Superfund costs (based on EPA data) had a more negative market reaction. A primary contribution of our research is the finding that both financial statement environmental disclosures and estimated Superfund costs have incremental value relevance.

Market Reactions to Announcements of Valuation Losses on Conversion Rights Embedded in Convertible Instruments

2020 ◽  
Vol 28 (1) ◽  
pp. 35-61
Author(s):  
Su Jeong Lee ◽  
Young Jun Kim ◽  
Eugenia Y. Lee ◽  
Ga-young Choi
Keyword(s):  
Stock Returns ◽  
Financial Reporting ◽  
Stock Prices ◽  
Stock Price ◽  
Fair Value ◽  
Convertible Bonds ◽  
Market Reactions ◽  
Announcement Date ◽  
Abnormal Stock Returns ◽  
Trading Volumes

Convertible instruments are financial instruments embedded with conversion rights such as convertible bonds or convertible preferred stocks. Under the Korean International Financial Reporting Standards (K-IFRS), the embedded conversion rights with certain conditions (i.e., a refixing clause) are recognized as derivative liabilities and are recognized at fair value in issuer’s financial statements. Since the value of convertible rights varies with the underlying stock value, an increase in the issuers’ stock price causes the issuers of convertible instruments to announce large derivative valuation losses. Using disclosures under the title of ‘Loss from Derivatives Trading’ from the KOREA EXCHANGE (KRX) during January 2016 through December 2019, this study examines market reactions to the disclosure of valuation losses on conversion rights embedded in convertible instruments. We find the following results. First, abnormal stock returns on the loss announcement date are significantly negative. Second, abnormal trading volumes peak on the loss announcement date. Third, abnormal stock returns persist in the long-term. Collectively, our findings suggest that investors perceive the loss disclosures as negative news, but fail to impound the information into issuer’s stock prices effectively. This study emphasizes the importance of education on convertible instruments and improvement in the disclosure requirements on valuation losses of conversion rights embedded in convertible instruments by providing evidence that investors face difficulty in understanding the related disclosures.

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