Stock Price Reaction Around Changes in Product Prices

Abstract

The main purpose of this study is to investigate product price changes from the stockholders' perspective. Our evidence indicates that stockholders react positively to a price increase at the time of the Wall Street Journal announcement. In the event of a price cut, stockholders show little reaction. In a longer interval, however, both price increases and price cuts are associated with negative stock returns. Our analysis also suggests that firms that initiate price changes experience declining sales prior to the price change decisions.

Citation

Iqbal, Z. and Shetty, S. (1996), "Stock Price Reaction Around Changes in Product Prices", Managerial Finance, Vol. 22 No. 3, pp. 3-10. https://doi.org/10.1108/eb018550