When do Firms with new CEOs Engage in M&A? The Role of Stock Market Reactions to the CEO Appointment

This study examines how the stock market reacts to pension fund activism. Recent changes in the Korea National Pension Service’s (NPS) voting policy present an ideal context to examine the effect of shareholder activism on stock market reactions. Using a sample of 46 firms for which the NPS pre-disclosed to veto agendas of 2019 annual shareholder meetings, this study demonstrates that the stock market reacts negatively to the NPS “vote no” announcements. The results reveal that shareholders pay attention to the negative signal the NPS’s veto announcement delivers. We also find that publicity is positively related to stock market reactions, consistent with the hypothesis that media coverage is an efficient mechanism for pension fund activism. The study further examines whether the negative stock market response is driven not by the NPS’s pre-disclosure to “vote no,” but just by the pre-disclosure. An event study is conducted using a sample of firms for which the NPS disclosed proxy voting decisions ahead of 2019 annual meetings but did not announce to veto. The results do not reveal a significant market response, suggesting that the pre-announcement itself does not affect the stock market reaction.

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Stock Market Reactions to New Product Launches in International Markets: The Moderating Role of Culture

Journal of International Marketing ◽

10.1177/1069031x19874789 ◽

2019 ◽

Vol 27 (4) ◽

pp. 81-98 ◽

Cited By ~ 3

Author(s):

M. Berk Talay ◽

M. Billur Akdeniz ◽

Michael Obal ◽

Janell D. Townsend

Keyword(s):

Stock Market ◽

Firm Value ◽

New Product ◽

International Markets ◽

Product Launch ◽

Market Reactions ◽

Product Launches ◽

Stock Market Reactions ◽

The Impact

Prior research indicates the importance of new product launches across international markets for firm performance. However, little is known about if, and how, new product launches in international markets drive firm financial value. This study examines the drivers of stock market reactions to a new product introduction in a foreign country, along with the moderating impact of cultural context. Using a sample of 1,154 products in 34 product categories launched in 48 countries between 2011 and 2018, the authors investigate how product characteristics such as product innovativeness and product type affect abnormal stock reactions to a new product launch event. Furthermore, the authors assess the role of the national culture by considering the individualism, uncertainty avoidance, and indulgence characteristics of the country where the new product is launched. Results of a mixed-effects estimation model indicate that product launches in international markets with innovativeness and hedonism characteristics positively affect firm value. The effects of culture are complex and multifarious, providing valuable insights regarding the impact of new product introductions in global markets on firm value.

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