Product and Market Diversification and the Stock Market Response to Business Combinations

2006 ◽  
pp. 216-241
Author(s):  
Pablo Sanchez-Lorda ◽  
Esteban Garcia-Canal
Keyword(s):  
Stock Market ◽  
Information Asymmetry ◽  
Strategic Alliances ◽  
Market Reaction ◽  
Abnormal Returns ◽  
Business Combinations ◽  
Stock Market Reaction ◽  
Resource Complementarity ◽  
The Relationship ◽  
Work First

In this chapter, we analyzed the stock market reaction to internationalization and diversification of the European telecom firms through acquisitions or strategic alliances. We analyzed these operations with the purpose of verifying to what extent the stock market reaction to these business combinations is influenced by information asymmetry, resource complementarity, and management costs. There are two main findings of this work. First, while acquisitions are more valued when entering into one of the more related businesses—telecommunication equipment shops—alliances, however, are only positively valued in the less related businesses. Second, the strength of the competitive position of the firm moderates the relationship between product and market diversification and abnormal returns.

Information Transfer among Internet Firms: The Case of Hacker Attacks

2003 ◽  
Vol 17 (2) ◽  
pp. 71-82 ◽  
Author(s):  
Michael L. Ettredge ◽  
Vernon J. Richardson
Keyword(s):  
Stock Market ◽  
Information Transfer ◽  
Market Reaction ◽  
Denial Of Service ◽  
Abnormal Returns ◽  
Internet Security ◽  
The Internet ◽  
Denial Of Service Attacks ◽  
Internet Firms ◽  
Stock Market Reaction

This study focuses on the stock market reaction to denial of service attacks against certain well-known Internet firms in February 2000. Investors appear to have used several heuristics in deciding which firms were “similar” to those attacked, and thus predicted that they were also likely to be attacked. The primary heuristic employed appears to have been similarity in reliance on the Internet to conduct operating activities (i.e., the set of Internet firms). We find negative mean abnormal returns among Internet firms not actually attacked (i.e., information transfer). This occurred both within Internet industries in which some firms were attacked, and within Internet industries with no attacks. A secondary heuristic appears to have been that Internet firms similar in size to those attacked (i.e., relatively large) were more likely to be attacked. In contrast to all other Internet industries, providers of Internet security products and services experienced positive mean abnormal returns.

The stock market reaction to dividend reductions and omissions in China

2019 ◽  
Vol 45 (3) ◽  
pp. 381-398
Author(s):  
Jing Dong ◽  
Hui Li ◽  
Kerry Liu ◽  
Xiaohui Wu
Keyword(s):  
Stock Market ◽  
Market Reaction ◽  
Factor Model ◽  
Abnormal Returns ◽  
Chinese Stock Market ◽  
Government Ownership ◽  
Chinese Market ◽  
Content Type ◽  
Stock Market Reaction ◽  
The Government

Purpose The purpose of this paper is to investigate Chinese stock market reaction to the announcements of dividend reductions and omissions. Design/methodology/approach The data sets cover the period from 1990 to 2009. A rolling portfolio approach is performed and the Fama–French three-factor model is used to calculate the post-announcement long-term abnormal returns. The matching method and the sub-sample tests are used to examine the robustness. Findings After controlling for firm size, the unexpected earnings and government ownership, no evidence of the dividend announcement drift is found. The results also show that the government ownership and the large trading play a role in explaining the post-announcement abnormal returns. Originality/value This is the first study concerning the Chinese market that examines the Chinese stock market reaction to dividend cut and omission using a long-time period of data.

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