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1 – 10 of over 20000Krishna Prasad and Nandan Prabhu
The purpose of this study is to investigate whether the earnings surprise influences decision to make earnings announcements during or after the trading hours is influenced by the…
Abstract
Purpose
The purpose of this study is to investigate whether the earnings surprise influences decision to make earnings announcements during or after the trading hours is influenced by the earnings surprise resulting from the difference between consensus earnings estimates and the actual reported earnings.
Design/methodology/approach
Event study methodology was employed to test the hypotheses relating to earnings surprise and timing of earnings announcements. Twelve quarterly earnings announcements of 30 companies, drawn from BSE SENSEX of India, were studied to test the hypothesized relationships.
Findings
The study has found statistically significant differences in the market responses to the earnings announcements made during and after the trading hours. The market demonstrated a negative response to the earnings announcements made after the trading hours. Further, the results of the logistic regression have shown that the presence of significant earnings surprises is likely to induce firms to make earnings announcements after the trading hours. The results indicate that those firms that intend to reduce the overreaction and underreaction to earnings surprises are likely to make earnings announcements after the trading hours.
Originality/value
This paper highlights the market response to the earnings announcement made during and after the regular trading hour. Further, the paper examines if the earnings surprise influences the decision to announce the results.
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The few studies on the effects of a sponsorship termination do not consider the effects of different exit options on consumers’ attitudes toward the exiting sponsor. To fill this…
Abstract
Purpose
The few studies on the effects of a sponsorship termination do not consider the effects of different exit options on consumers’ attitudes toward the exiting sponsor. To fill this gap, the purpose of this paper is to investigate the effects of the extent of the exit (gradual vs entire) as well as the timing of the announcement (early vs late) on consumers’ attitudes. Moreover, this research considers the mediating role of the perceived abandonment of the sponsored party.
Design/methodology/approach
This research uses an experimental study (n=204). Data were collected among supporters of a German second division soccer team.
Findings
The results emphasize that the extent of the exit as well as the timing of the announcement influences consumers’ attitudes. They develop negative attitudes toward the withdrawing sponsor, especially when the sponsor exits entirely instead of gradually and announces the decision late instead of early. Furthermore, the results reveal that the perceived abandonment of the sponsored party mediates the effect of the extent of exit on attitudes.
Practical implications
The results help to formulate several exit options for the withdrawing sponsor that will help to minimize the possible negative effects on their brand. Specifically, the author recommends a gradual exit as well as an early announcement of the decision to prevent negative effects on the sponsor brand.
Originality/value
This study expands the research on the effects of a sponsorship termination on consumers’ attitudes toward the sponsor brand. Specifically, it is the first study that considers several aspects regarding the sponsor management of a sponsorship termination as important determinants of consumers’ attitudes.
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This paper uses data on over 4,600 layoff announcements in the U.S., covering each firm that ever existed in the Fortune 500 between 1970 and 2000, along with 40 interviews of…
Abstract
This paper uses data on over 4,600 layoff announcements in the U.S., covering each firm that ever existed in the Fortune 500 between 1970 and 2000, along with 40 interviews of senior managers in 2001 and 2002 to describe layoffs in large U.S. firms over this period. In order to motivate further work in the area, I investigate six main issues related to layoffs: timing of layoffs, reasons for layoffs, the actual execution of layoffs, international workers, labor unions, and the types of workers by occupation and compensation categories. The paper draws on literature from many fields to help further understand these issues.
Steven Muzatko and Gaurav Bansal
This research examines the relationship between the timeliness in announcing the discovery of a data breach and consumer trust in an e-commerce company, as well as later…
Abstract
Purpose
This research examines the relationship between the timeliness in announcing the discovery of a data breach and consumer trust in an e-commerce company, as well as later trust-rebuilding efforts taken by the company to compensate users impacted by the breach.
Design/methodology/approach
A survey experiment was used to examine the effect of both trust-reducing events (announced data breaches) and trust-enhancing events (provision of identity theft protection and credit monitoring) on consumer trust. The timeliness of the breach announcement by an e-commerce company was manipulated between two randomly assigned groups of subjects; one group viewed an announcement of the breach immediately upon its discovery, and the other viewed an announcement made two months after the breach was discovered. Consumer trust was measured before the breach, after the breach was announced, and finally, after the announcement of data protection.
Findings
The results suggest that companies that delay a data breach announcement are likely to suffer a larger drop in consumer trust than those that immediately disclose the data breach. The results also suggest that trust can be repaired by providing data protection. However, even after providing identity theft protection and credit monitoring, companies that fail to promptly disclose a breach have lower repaired trust than companies that promptly disclose.
Originality/value
This study contributes to the literature on e-commerce trust by examining how a company's forthrightness in reporting a data breach impacts user trust at the time of the disclosure of the data breach and after subsequent efforts to repair trust.
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Haifeng You and Xiao‐Jun Zhang
This study aims to examine whether limited attention leads to the market underreaction to earnings announcement and 10‐K filings.
Abstract
Purpose
This study aims to examine whether limited attention leads to the market underreaction to earnings announcement and 10‐K filings.
Design/methodology/approach
This is an empirical study involving statistical analysis of a large sample of data, obtained from Compustat, CRSP and Xignite Inc. Both portfolio analysis and multivariate regressions are used in hypotheses testing.
Findings
The following key findings are presented in the paper. First, we show that among large firms, investors under‐react more to the information contained in 10‐K filings than earnings announcements. Second, underreaction to earnings announcements tends to be stronger for small firms than large firms. Third, we find that companies report their earnings and 10‐Ks earlier when there is a higher demand for such information, and document a negative relationship between the degree of underreaction and the timeliness of such information release. Finally, we show that the recent ruling by SEC to accelerate 10‐K filing has little impact on the degree of investors' underreaction to 10‐K information.
Research limitations/implications
The findings of this study suggest that investors' failure to devote enough attention to an economic event leads to underreaction, and the degree of underreaction is negatively correlated with the amount of investor attention.
Practical implications
Investors need to periodically reassess the informational contents of economic events, and allocate their attention accordingly, in order to avoid underreaction.
Originality/value
This study analyzes and the roles of limited attention in determining the degree of investor underreaction to earnings announcement and 10‐K filings. The comparison of the two related but distinct financial reporting events yields interesting insights.
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Li‐Chin Jennifer Ho, Chao‐Shin Liu and Jeffrey Tsay
The purpose of this paper is to re‐examine the issue of financial analysts' reaction to enterprise resource planning (ERP) announcements by employing actual firm data and archival…
Abstract
Purpose
The purpose of this paper is to re‐examine the issue of financial analysts' reaction to enterprise resource planning (ERP) announcements by employing actual firm data and archival earnings forecast observations. As an extension of prior ERP studies, this paper also tests whether forecast revisions vary with the timing of adoption.
Design/methodology/approach
Based on 188 firms that announced ERP plans during the years 1993 through 2002, this paper investigates the financial analysts' reaction to ERP announcements by comparing their earnings forecasts issued immediately before and after the ERP announcement. To examine the effect of adoption timing, this paper partitions the sample into three groups: early (1993‐1997), middle (1998‐1999) and late (2000‐2002) adopters.
Findings
Results show that significantly positive revisions occur in longer term forecasts (i.e. three‐year‐ahead forecasts) but not in the shorter term predictions such as one‐ and two‐year‐ahead forecasts. In addition, there is some weak evidence that financial analysts react less positively to middle adopters than to early or late adopters. This finding could be attributed to the fact that many firms adopted ERP systems to work out the Y2K problems during the 1998‐1999 period.
Originality/value
The main finding confirms that financial analysts consider ERP implementations beneficial to the adopters in the long term. Companies contemplating ERP adoption should take this time horizon into account.
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Zhiqiang Ye, Zhi Zhang and Songlian Tang
The purpose of this paper is to test the relationship between stock dividends policy and liquidity of ex ante announcement to improve the traditional stock dividends liquidity…
Abstract
Purpose
The purpose of this paper is to test the relationship between stock dividends policy and liquidity of ex ante announcement to improve the traditional stock dividends liquidity hypothesis.
Design/methodology/approach
The authors examine a sample of 2,088 which matching stocks between having stock dividends policy and having no dividends policy during 1999-2012 in Chinese listed firms. Using the multiple liner regression, the authors empirically tests the relationship between the possibility, payout ratio and timing choice of stock dividends and the liquidity of ex ante announcement.
Findings
The authors find that the possibility of stock dividends policy has negative relationship with liquidity, and the relationship of stock dividends and liquidity of ex ante announcement is influenced by the time choice of stock dividends.
Originality/value
This paper study the reason of stock dividends policy from the perspective of liquidity and improve the traditional stock dividends liquidity hypothesis.
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Kevin Campbell and Chijioke Ohuocha
The purpose of this paper is to examine whether stock dividend announcements create value for companies traded on the Nigerian stock market and to ascertain the nature of the…
Abstract
Purpose
The purpose of this paper is to examine whether stock dividend announcements create value for companies traded on the Nigerian stock market and to ascertain the nature of the information such announcements convey.
Design/methodology/approach
A standard event study methodology, employing the market model, is applied to determine the abnormal returns both on and surrounding the stock dividend announcement date. A sample is broken down based on the timing of announcements and on the frequency with which the announcing companies' shares are traded. The authors also examine the information content of stock dividends by applying the χ2 technique to test the level of association between earnings, cash dividends and stock dividends.
Findings
The findings suggest that companies that choose their own announcement date outside the Nigerian stock exchange announcement window experience positive abnormal returns if their stock is more frequently traded and negative abnormal returns if their stock is less frequently traded. In addition, support is found for both the cash substitution hypothesis and the signalling hypothesis as explanations for the information stock dividends convey to shareholders.
Research limitations/implications
The small number of companies in the “early announcement” group may not permit a definitive view to be established about the stock market reaction to early stock dividend announcements for this group of companies.
Practical implications
The findings are of practical relevance to researchers, practitioners and investors interested in companies listed on the Nigerian stock market as they reveal the extent to which the shares reflect fundamental information from corporate announcements.
Originality/value
This paper adds to the very limited academic research on the stock market reaction to stock dividend announcements in Nigeria.
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Christian Happ and Dirk Schiereck
This paper aims to analyze the effects on shareholder value caused by the announcement of seasoned equity offerings (SEOs) by real estate firms from 12 European countries.
Abstract
Purpose
This paper aims to analyze the effects on shareholder value caused by the announcement of seasoned equity offerings (SEOs) by real estate firms from 12 European countries.
Design/methodology/approach
A 4-factor model event study is conducted to assess the impact of SEO announcements on firm value. Additionally, a cross-sectional regression is run to identify factors that aggravate or mitigate the documented announcement effects.
Findings
Significant wealth losses of −1 per cent are found on the announcement day of an SEO. However, firms with good corporate governance and a low probability of overinvesting experience less negative announcement effects.
Research limitations/implications
The present study considers equity financing. In this context, investors seem to thoroughly assess the implications of capital increases by looking at quality indicators. For firms with good corporate governance, management incentivizing mechanisms and a lower probability of overinvesting, shareholders’ trust in the management mitigates the bad signal that the announcement of an SEO usually conveys.
Originality/value
The finding of corporate governance as a value enhancing factor in the context of equity offerings, even during periods of financial turmoil, is reassuring to both managers and regulators.
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Do regional equity market conditions (bear market) affect the financial performance of firms involved in cross-border mergers and acquisitions (M & A)? If so, is there a…
Abstract
Purpose
Do regional equity market conditions (bear market) affect the financial performance of firms involved in cross-border mergers and acquisitions (M & A)? If so, is there a clear difference between inward and outward M & A in selected regions? The author addresses these questions using a sample of cross-border M & A between 1990 and 2013 in three major geographical regions of the emerging markets: Brazil, Russia, India, and China (BRIC), Eastern Europe, and Africa. The author finds that regional equity market conditions – such as bear equity conditions – along with direction of the cross-border M & A (inward vs outward), and differences in economic fundamentals among these regions carry valuable information and have real effects on market reactions to the announcement of cross-border M & A transactions. The paper aims to discuss these issues.
Design/methodology/approach
Using an empirical approach, the author takes a regional perspective, with emphasis on three regions (BRIC, Eastern Europe, and Africa), and aim to determine the impact of the state of the regional equity market (bear stock market), and direction and duration of the M & A on market reactions to the announcement of cross-border M & A.
Findings
The author documents the impact of regional equity market conditions on the financial performance of firms involved in cross-border M & A. The author underlines that differences in economic fundamentals among regions carry valuable information and have real effects on the performance of target firms.
Practical implications
On the one hand, merger arbitrage investors are keen to learn how to profit and position their investments accordingly during those periods. Therefore, this study has also put the limelight on the underlying factors that influence the market reaction around the M & A announcement at the regional level and clearly shows the additional benefits of regional market conditions, direction of the transactions, and the timing to highlight the positive gain of those equity investments regarding the emerging markets. On the other hand, as the purpose of the study is to delve into the market reactions to the M & A announcement while taking into consideration some relevant factors such as regional equity market conditions to assist companies’ managers and CEOs to effectively choose the right time.
Social implications
By incorporating the result presented in this study, another “family” of mutual funds, beyond just the combination of risky assets and the riskless asset is being introduced. Those investment portfolios which take into account merger and/or any opportunistic strategies are tailored more to the needs of various clienteles. For assisting the analyst and portfolio manager, the intuitive character of the result makes it versatile and easy to use by investment firms as an additional decision tool.
Originality/value
To the author knowledge, this is the first study that delves into the market performance of companies involved in cross-border M & A in the emerging markets by taking a regional perspective and aiming to determine the impact of the state of the regional equity market (bear stock market) on the M & A. It offers additional support to those institutional investors who are pursuing international diversification across various countries including emerging markets such that bear equity conditions (recessions in the regional stock markets) have an additional negative impact and a real effect on the performance of target firms.
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