scholarly journals Stock Market Reactions to Pollution Information Disclosure: New Evidence from the Pollution Blacklist Program in China

2021 ◽  
Vol 13 (4) ◽  
pp. 2262
Author(s):  
Yalin Zhou ◽  
Jing Cao ◽  
Yujia Feng
Keyword(s):  
Stock Market ◽  
Information Disclosure ◽  
Abnormal Returns ◽  
Market Reactions ◽  
Cumulative Abnormal Returns ◽  
Green Finance ◽  
Stock Market Performance ◽  
Negative Effect ◽  
Stock Market Reactions ◽  
Polluting Firms

Public disclosure of environmental information has been widely used as an important instrument in green finance. In this paper, we examine a blacklist program of polluting firms and conduct an event study to evaluate how the stock market responds to the pollution news. Our results show that the pollution disclosure indeed had a significant negative effect on the stock market performance of listed companies on the blacklists, but only when the overall market was under downward shocks, suggesting that the shareholders were more sensitive to the pollution news in bad times. When the stock market performed well or was relatively stable, the blacklist effects were not evident. Our heterogeneity analyses further revealed that the magnitude of the cumulative abnormal returns depended on the firm size. That is, the larger the firms are, the less they suffer from the pollution news release. Our findings show that pollution disclosure does penalize the polluting firms through stock market response mechanisms.

scholarly journals Stock Market Reactions to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership’s Approval: Evidence from Vietnam

2021 ◽  
Vol 36 (3) ◽  
pp. 462-490
Author(s):  
Son Tung Ha ◽  
Thi Hong Hanh Pham ◽  
Thi Nguyet Anh Nguyen
Keyword(s):  
Stock Market ◽  
Abnormal Returns ◽  
Stock Exchanges ◽  
Market Returns ◽  
Market Reactions ◽  
Listed Firms ◽  
Stock Market Performance ◽  
Study Methodology ◽  
Stock Market Reactions ◽  
Event Study Methodology

We examine the stock market performance of Vietnam’s listed firms in response to the country’s approval of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Employing an event study methodology, we first calculate the abnormal returns of all listed Vietnamese firms around the CPTPP’s approval date. Then, we attempt to link these abnormal returns to firms’ characteristics. We find evidence that the announcement of the CPTPP’s approval is associated with positive abnormal returns for Vietnam’s listed firms. We also find considerable heterogeneity in the magnitude and pace of the impacts of the CPTPP’s approval on market returns across Vietnam’s two stock exchanges. However, we fail to reject the null hypothesis that the market did not react to the CPTPP’s approval at the sectoral level.

scholarly journals Stock Market Reactions to Financing and Payment Decisions for European Mergers and Acquisitions

2020 ◽  
Vol 4 (2) ◽  
pp. 41-89
Author(s):  
Wolfgang Bessler ◽  
David Kruizenga ◽  
Wim Westerman
Keyword(s):  
Stock Market ◽  
Mergers And Acquisitions ◽  
Abnormal Returns ◽  
Market Reactions ◽  
Valuation Effects ◽  
Payment Methods ◽  
Cumulative Abnormal Returns ◽  
Study Methodology ◽  
Acquisition Announcements ◽  
Stock Market Reactions

Aim: We analyze stock market reactions to merger and acquisition announcements for firms in Europe and contribute to the literature by providing empirical evidence how the decisions with respect to alternative financing sources (equity or debt) and the methods of payment (cash or stock) affect the magnitude of the valuation effects.   Research design: An event study methodology is applied to 717 M&A transactions. We analyze the size of the cumulative abnormal returns using the financing sources and payment methods and other variables as the relevant determinants.   Findings: The cumulative abnormal results suggest that target shareholders and bidder shareholders in private deals benefit from mergers and acquisitions. The effect found is centered around the announcement date, making our findings consistent with market efficiency. Debt financed deals outperform equity financed deals and cash paid M&A outperform stock paid M&As, due to information asymmetry, signaling and agency effects.   Originality: This study adds to our understanding of the relevance of the financing sources and the payment methods for mergers and acquisitions in Europe.   Implications: This study may help practitioners to better assess the valuation effects of alternative financing sources and payment methods when acquiring other firms.     JEL: G32, G34

Stock market reactions to layoff announcements – analysis of the renewable energy sector

2017 ◽  
Vol 11 (2) ◽  
pp. 311-328 ◽  
Author(s):  
Stephan Kunert ◽  
Dirk Schiereck ◽  
Christopher Welkoborsky
Keyword(s):  
Renewable Energy ◽  
Stock Market ◽  
Capital Market ◽  
Abnormal Returns ◽  
Shareholder Wealth ◽  
Energy Sector ◽  
Market Reactions ◽  
Content Type ◽  
The Public ◽  
Stock Market Reactions

Purpose This study aims to analyze stock market reactions to layoff announcements in the renewable energy sector. The global renewable energy sector and most of the producers of wind and solar energy equipment are struggling. While changes in the regulation and in the promotion of energy production from renewable sources reduced the attractiveness of these technologies, many involved companies had to downsized their workforce to increase performance. The public often perceives these announcements as a way of increasing shareholder wealth at the cost of the employees. Support for this claim is often given in the form of isolated case study considerations. However, the case may be different for the renewable energy sector as changes in the overall institutional environment have sustainably deteriorated the prospects of this industry. Design/methodology/approach This study analyses stock market reactions of 65 layoff announcements made by companies in the renewable energy industry in the years from 2005 to 2014. The reactions are measured by cumulative abnormal returns, which are obtained by using the event study methodology. Findings It shows a significantly negative market reaction to the announcement of a layoff plan on the event day. The findings are generally in line with our expectations and underline the negative perspectives of the sector from a capital market point of view and the declining importance of the sector with respect to employment numbers. Originality/value The results of this study are important for investors when estimating the capital market reactions to layoff announcements and when they form their own expectations regarding possible future layoff announcements. For the public, the results are of interest as the prejudice, that layoff plans are used to increase shareholder wealth, can be dismantled. The opposite is shown.

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 The Wealth Effect of Corporate Water Actions: How Past Corporate Responsibility and Irresponsibility Influence Stock Market Reactions

2021 ◽  
Author(s):  
Rafia Afrin ◽  
Ni Peng ◽  
Frances Bowen
Keyword(s):  
Water Resources ◽  
Stock Market ◽  
Abnormal Returns ◽  
Wealth Effect ◽  
Shareholder Wealth ◽  
Past Performance ◽  
Market Reactions ◽  
Insurance Effect ◽  
Stock Market Reactions ◽  
Marginal Returns

AbstractEnsuring access to clean water is one of the most important development and health challenges of the twenty-first century. Given the manifold impacts of business activities on water resources, corporate water actions should be of central concern to business ethics researchers. Yet so far we know too little about whether business activities that impact on water resources are noticed or how corporate water actions are valued by a firm’s stakeholders, including by financial markets. In response, we conduct an event study to investigate the shareholder wealth effect of reports of corporate water actions. We explore stock market reactions to water actions by S&P 500 firms from 2005 to 2017, showing that the market reacts positively to reports of responsible water actions and negatively to irresponsible actions. We further explain that these abnormal returns to water actions are associated with a firm’s past performance on ethical issues, arguing that the reputational effects from prior corporate social responsibility and irresponsibility influence market reactions. Our analysis provides evidence that there are diminishing marginal returns to responsible water actions for firms with records of past responsibility and an offsetting effect for those with past irresponsibility. Similarly, we demonstrate an insurance effect that limits punishment for irresponsible water actions for firms with responsible performance records and diminishing negative marginal returns for those already seen to be irresponsible. This study is the first to show that shareholders recognize market value in corporate water actions and are prepared to award or punish firms in stock markets based on their impacts on water.

Stock Market Reactions and Formula One Performance

2011 ◽  
Vol 25 (4) ◽  
pp. 305-313 ◽  
Author(s):  
Klaus Schredelseker ◽  
Fedja Fidahic
Keyword(s):  
Stock Market ◽  
Global Financial Crisis ◽  
Abnormal Returns ◽  
Market Reactions ◽  
Formula One ◽  
Study Methodology ◽  
The One ◽  
The Global Financial Crisis ◽  
Stock Market Reactions ◽  
Event Study Methodology

Due to the global financial crisis, the investments of car manufacturers are going to be revised as never before; especially this is the case for any kind of commitment in sport sponsoring. In Formula One on the one hand costs are exploding, on the other hand money becomes shortened. That is why it becomes interesting to know to what extent a manufacturer’s involvement in this sport is worth it. We use an event study methodology analyzing the stock market response after race performances from 2005 to 2007. Our main results: McLaren- Mercedes and Fiat-Ferrari generate positive abnormal returns after wins for DaimlerChrysler and Fiat, and significantly weaker abnormal returns after losses. Conversely, returns for Renault change in an opposite way.

scholarly journals The impact of different types of interorganizational co-operation on shareholder value – the case of Germany

2009 ◽  
Vol 6 (4) ◽  
pp. 542-550
Author(s):  
Robert Obermaier ◽  
Andreas Busch
Keyword(s):  
Stock Market ◽  
Ad Hoc ◽  
Abnormal Returns ◽  
Market Reactions ◽  
Interorganizational Cooperation ◽  
Cooperative Agreements ◽  
German Stock ◽  
Institutional Types ◽  
Stock Market Reactions ◽  
The Impact

This event study analyses stock market reactions of 621 adhoc notifications announcing interorganizational cooperative agreements issued by stock listed German firms between 1999 and 2007. Besides testing the general relationship between ad hoc notifications of interorganizational cooperations and stock market response this study is the first one analyzing different institutional types of cooperational agreements for the German stock market. The announcement cooperational agreements results in significant positive mean abnormal returns. Surprisingly, announcements of contractual partnerships yield the highest abnormal returns compared to alternative forms combined with equity stakes. Obviously, shareholders do not necessarily relate better control of interorganizational cooperation to ownership.

Sovereign rating announcements and the integration of African banking markets

2019 ◽  
Vol 20 (5) ◽  
pp. 484-500
Author(s):  
Jianan He ◽  
Dirk Schiereck
Keyword(s):  
Stock Market ◽  
Capital Market ◽  
Sovereign Debt ◽  
Credit Rating ◽  
Abnormal Returns ◽  
African Countries ◽  
Market Reactions ◽  
Content Type ◽  
Rating Changes ◽  
Stock Market Reactions

Purpose The purpose of this paper is to examine the information spillover of sovereign rating changes on the market valuation of bank stocks in Africa. Design methodology First, the authors apply event study methodology to evaluate the stock market reaction of African bank stocks on the announcement of sovereign rating changes. Second, the cross sections of the abnormal returns are examined by multivariate regression analyses. Third, the findings are proved for robustness. Findings The authors investigate how 37 African banks react to 203 African sovereign rating announcements from the three leading credit rating agencies over the period 2010-2016 and find that negative announcements trigger the significant positive stock reactions of African banks, especially contributed by banks in the non-reviewed African countries. These unusual reactions can be explained by the low integration and the severe information asymmetry of African capital markets. The authors further locate the influencing factors of banks’ reactions and show that rating downgrades magnify the abnormal effects while the membership of the African Free Trade Zone mildens the stock market reactions. Research limitations/implications Limitations are given by the limited sample size. There are only limited numbers of publicly listed African banks with sufficient trading data. Practical implications The paper argues for a critical dependency of African bank equity valuation in the case of sovereign debt rating changes in neighbor countries. This observation is important for the risk assessment of African banking assets. Originality/value The paper is the first to examine stock market reactions on sovereign rating announcements for the evaluation of capital market integration in Africa. It thereby underlines the usefulness of this simply to apply approach as an instrument for ongoing examining the progress in capital market development in emerging countries.

scholarly journals Asset-light strategies and stock market reactions to COVID-19’s pandemic announcement: The case of hospitality firms

2021 ◽  
pp. 135481662110051
Author(s):  
Cédric Poretti ◽  
Cindy Yoonjoung Heo
Keyword(s):  
Stock Market ◽  
Behavioral Finance ◽  
Abnormal Returns ◽  
Research Note ◽  
World Health ◽  
Information Uncertainty ◽  
Market Reactions ◽  
Hospitality Firms ◽  
Health Organization ◽  
Stock Market Reactions

This research note investigates the stock market reactions of international hospitality firms to COVID-19’s pandemic announcement by the World Health Organization. In line with the behavioral finance literature, the findings indicate that, in the short term, investors overestimated the risks underlying asset-heavy firms because of information uncertainty. Firms pursuing an asset-light (AL) strategy are associated to significantly less negative cumulative abnormal returns in the 4 days following the announcement, especially firms following an AL strategy that reduces significantly the operating leverage. However, this difference vanishes after 5 trading days, meaning that investors revised their expectations. This research note suggests that the cost structure of AL firms matters in reducing information uncertainty and sheds light on the consequences of the COVID-19 crisis on the hospitality industry. It also provides useful information to board members, financial analysts, and companies’ top managers when evaluating whether and how to pursue an AL strategy, and the potential consequences of it.

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