Search results

1 – 10 of over 1000
Book part
Publication date: 12 November 2016

Aysun Ficici, Bo Fan, C. Bülent Aybar and Lingling Wang

This paper attempts to explore the interrelationships between the split-share structure reform and privatization processes in light of the interplay between the listing…

Abstract

Purpose

This paper attempts to explore the interrelationships between the split-share structure reform and privatization processes in light of the interplay between the listing announcements of the non-traditional shares of the Chinese firms within the steel industry and market reaction to these listed shares, as well as to analyze the value gained by the firms due to the privatization processes.

Methodology/approach

The paper examines market reaction to the listing announcements of non-traditional shares as traditional shares by employing event-study methodology. To determine the success of privatization process and value creation to the firm, the paper utilizes multivariate analysis.

Findings

The exogenous factors emphasized in a topographical order, explicitly profitability, efficiency, and leverage, are related to the privatization processes and split-share structure reform that impact the market. The study supports that market reacts positively to the listing announcements of non-traditional shares. Being listed improves value to the firm.

Research limitations/implications

The limitation of this study is the lack of data on country, industry, and firm factors; and this study merely relates to one specific industry and one country.

Originality/value

The paper fills a gap in the literature by articulating the impact of privatization and split-share structure reform on both market reaction and firm value. It focuses on the impact of a dynamic process rather than the impact of a static constituent on market reaction and firm value, as the previous studies have been concentrating on. The research shows that there is an accelerated privatization process of state-owned firms in Chinese steel industry and their integration in capital markets.

Book part
Publication date: 26 November 2014

Kimberly M. Ellis and Phyllis Y. Keys

To explain for doctoral students and new faculty, the appropriate techniques for using event study methods while identifying problems that make the method difficult for use in the…

Abstract

Purpose

To explain for doctoral students and new faculty, the appropriate techniques for using event study methods while identifying problems that make the method difficult for use in the context of African markets.

Methodology/approach

We review the finance and strategy literature on event studies, provide an illustrative example of the technique, summarize the prior use of the method in research using African samples, and indicate remedies for problems encountered when using the technique in African markets.

Findings

We find limited use of the technique in African markets due to limited data availability which is attributable to problems of infrequent trading, thin markets, and inadequate access to free data.

Research limitations

Our review of the literature on event studies using African data is limited to English-language journals and sources accessible through our library research databases.

Practical implications

More often, researchers will need to use nonparametric techniques to evaluate market responses for companies in or events affecting the African markets.

Originality/value of the chapter

We make a contribution with this chapter by giving a more detailed description of event study methods and by identifying solutions to problems in using the technique in African markets.

Details

Advancing Research Methodology in the African Context: Techniques, Methods, and Designs
Type: Book
ISBN: 978-1-78441-489-4

Keywords

Article
Publication date: 25 August 2022

James Ndirangu Ndegwa

The purpose of this study is to investigate market reaction to corporate governance reform pronouncements on board diversity in Kenyan listed firms.

Abstract

Purpose

The purpose of this study is to investigate market reaction to corporate governance reform pronouncements on board diversity in Kenyan listed firms.

Design/methodology/approach

An event study was performed using 240 days pre-event period and an event period that consisted of 25 days pre and 25 days post the March 2016 board diversity reforms announcement in Kenya. The difference in differences (DiD) method was also used for cause–effect analysis for two years before and three years after the March 2016 board diversity reforms announcement. The outcome variable was firm value, whereas the treatment and control groups were Kenyan listed firms and deposit-taking credit unions, respectively.

Findings

The event study method found cumulative abnormal returns after the date of the board diversity reforms announcement to be positive and significant. The DiD methods found a positive and significant market reaction to the March 2016 board diversity reforms announcement in Kenya.

Research limitations/implications

This study was limited by the secondary data that was collected and analyzed from financial statements and stock price data from the Nairobi Securities Exchange (NSE). Financial statements have the disadvantage of being affected by the judgment and estimates of their preparers or accountants.

Practical implications

Emerging markets like the NSE are vulnerable to market manipulation by insiders. Efficient stock markets are known to attract more investors who are interested in a trustworthy stock price determination mechanism. The Capital Market Authority should thus continue implementing corporate governance reforms aimed at improving the efficiency of the NSE and the trustworthiness of stock prices therein. The continued reforms thus imply better value for money for the NSE investors.

Originality/value

This study makes an important contribution to literature by combining an event study and DiD analysis to assess market reaction to board diversity reform announcements in emerging markets of sub-Saharan Africa which is a concept that has not been researched before. Past studies have used event studies to investigate the efficiency status of stock markets in sub-Saharan Africa, whereas the current study used an additional method of DiD and hence contributed to literature.

Details

Corporate Governance: The International Journal of Business in Society, vol. 23 no. 2
Type: Research Article
ISSN: 1472-0701

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Article
Publication date: 8 December 2023

Weihua Liu, Tingting Liu, Ou Tang, Paul Tae Woo Lee and Zhixuan Chen

Using social network theory (SNT), this study empirically examines the impact of digital supply chain announcements disclosing corporate social responsibility (CSR) information on…

Abstract

Purpose

Using social network theory (SNT), this study empirically examines the impact of digital supply chain announcements disclosing corporate social responsibility (CSR) information on stock market value.

Design/methodology/approach

Based on 172 digital supply chain announcements disclosing CSR information from Chinese A-share listed companies, this study uses event study method to test the hypotheses.

Findings

First, digital supply chain announcements disclosing CSR information generate positive and significant market reactions, which is timely. Second, strategic CSR and value-based CSR disclosed in digital supply chain announcements have a more positive impact on stock market, however there is no significant difference when the CSR orientation is either towards internal or external stakeholders. Third, in terms of digital supply chain network characteristics, announcements reflecting higher relationship embeddedness and higher digital breadth and depth lead to more positive increases of stock value.

Originality/value

First, the authors consider the value of CSR information in digital supply chain announcements, using an event study approach to fill the gap in the related area. This study is the first examination of the joint impact of digital supply chain and CSR on market reactions. Second, compared to the previous studies on the single dimension of digital supply chain technology application, the authors innovatively consider supply chain network relationship and network structure based on social network theory and integrate several factors that may affect the market reaction. This study improves the understanding of the mechanism between digital supply chain announcements disclosing CSR information and stock market, and informs future research.

Details

Industrial Management & Data Systems, vol. 124 no. 2
Type: Research Article
ISSN: 0263-5577

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Article
Publication date: 18 May 2020

Weihua Liu, Wanying Wei, Cheng Si, Dong Xie and Lujie Chen

This study empirically examines the impact of announcements on supply chain strategic collaboration (SCSC) on companies' shareholder value.

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Abstract

Purpose

This study empirically examines the impact of announcements on supply chain strategic collaboration (SCSC) on companies' shareholder value.

Design/methodology/approach

This study analyzes changes in shareholder value of companies listed in China based on data of 208 SCSC announcements. The signaling theory is applied to determine correlation among SCSC announcements and the market. An event study is used to estimate the stock market reaction to SCSC announcements. The common market model estimates stock abnormal returns after the event. The least squares method and regression model calculate the model parameter value.

Findings

There is a positive and statistically significant relationship between SCSC announcement and shareholder value. Market reaction to product development collaboration is significantly higher than to technology-sharing collaboration, market collaboration, and other SCSC types. The market reacts more positively to suppliers and companies with greater supply chain control power than to buyers and companies with lower control power. Announcements from the service supply chain can lead to stronger market reactions than those from manufacturing supply chains.

Practical implications

The findings provide a systematic assessment of how SCSC announcements contribute to firms' shareholder value. The result provides a benchmark of value promotion that can be expected from SCSC announcements.

Originality/value

This study fills the research gap that using secondary data to assess changes in companies’ shareholder value caused by SCSC announcements and firstly examines these changes by constructing the signaler–signal–receiver progress based on signaling theory. The research results provide a new reference and inspiration for deeper understanding of the impact mechanism of SCSC. Furthermore, this study contributes to the development of the signaling theory using an empirical study in an emerging market, China.

Details

International Journal of Operations & Production Management, vol. 40 no. 4
Type: Research Article
ISSN: 0144-3577

Keywords

Article
Publication date: 12 July 2021

Yuzuka Nakajima and Yushi Inaba

This study aims to examine the impact of voluntary adoption of integrated reporting on the stock prices of firms in Japan.

Abstract

Purpose

This study aims to examine the impact of voluntary adoption of integrated reporting on the stock prices of firms in Japan.

Design/methodology/approach

The event study methodology was used to analyze the stock market reactions to voluntary integrated report (IR) publication. Abnormal returns were estimated for 1,602 observations of 490 firms publishing IRs in Japan using the market model. The t-test, the Boehmer et al., 1991 test and the generalized sign test examined the significance of the cumulative average abnormal returns (CAARs).

Findings

The study reveals that the stock market reacts positively to voluntary IR publication by firms, especially in 2019 and 2015. Additionally, it reveals a tendency for higher CAARs around IR publication dates than around corporate social responsibility report publication dates, especially in 2016 and 2015.

Research limitations/implications

The limitations of this study include the possibility of self-selection bias and omitted variable bias.

Practical implications

This study suggests that firms can earn higher abnormal returns in the stock market through environmental, social and governance (ESG) disclosure in IRs, corroborating the recently rising investor interest in voluntary integrated reporting in Japan.

Originality/value

This study contributes to the literature on the value relevance of voluntary adoption of integrated reporting by providing evidence of firms achieving significantly positive abnormal returns around voluntary IR publication dates. There is no published analysis on this topic using multitudes of sample firms using the event study methodology.

Details

Journal of Financial Reporting and Accounting, vol. 20 no. 3/4
Type: Research Article
ISSN: 1985-2517

Keywords

Article
Publication date: 13 September 2018

Nicolas Hardy, Nicolas S. Magner, Jaime Lavin, Rodrigo A. Cardenas and Mauricio Jara-Bertin

The purpose of this paper is to provide evidence about the effects of the MILA agreement in terms of improving financial market efficiency.

Abstract

Purpose

The purpose of this paper is to provide evidence about the effects of the MILA agreement in terms of improving financial market efficiency.

Design/methodology/approach

The authors measure efficiency by studying the stock reaction to earnings announcements using a conditional heteroscedasticity generalized autoregressive conditional heteroscedasticity-adjusted market model and the most commonly implemented event study tests for 3,399 events across four countries in the Latin American Integrated Market (MILA).

Findings

Contrary to expectations, the results show that the MILA agreement has isolated gains in terms of reaction to corporate earnings announcements, which translates into partial improvements in market efficiency. However, the evidence indicates that the MILA agreement favored cointegration, which is in line with other studies.

Practical implications

This paper provides evidence for policymakers and regulators that a stock market agreement is a condition that promotes market cointegration, but it is not an element that in itself ensures an improvement in market efficiency. To achieve greater MILA benefits, regulatory and market-level changes are required.

Originality/value

This is the first study that analyses the effect of a stock market agreement on the efficiency of markets, expanding on what has been studied in the finance literature regarding the influence of these agreements on cointegration.

Propósito

Esta investigación entrega evidencia sobre los efectos del acuerdo MILA respecto a mejoras en la eficiencia de los mercados accionarios involucrados.

Diseño/metodología/enfoque

Medimos eficiencia estudiando la reacción de los mercados accionarios tras anuncios de resultados utilizando un modelo de mercado ajustado por heteroscedasticidad condicional (GARCH). Además, consideramos las pruebas de estudios de evento más utilizadas en la literatura para 3,399 eventos en los 4 países involucrados en el acuerdo MILA.

Resultados

Contrario a lo esperado, los resultados muestran que el acuerdo MILA genera aumentos marginales en la reacción frente a anuncios corporativos, lo cual se traduce en mejoras parciales de la eficiencia de mercados accionarios. Sin embargo, la evidencia muestra que el MILA sí favorece a la cointegración, lo cual va en línea con estudios previos.

Implicancias prácticas

Esta investigación entrega evidencia para reguladores de que un acuerdo de integración bursátil promueve cointegración entre mercados, pero no es un elemento que por sí solo asegure una mejora en eficiencia. Para alcanzar mayores beneficios del acuerdo MILA, se requieren cambios adicionales a nivel de mercado accionario y de regulación.

Originalidad/valor

Este es el primer estudio que analiza el efecto de un acuerdo de integración bursátil en la eficiencia de los mercados accionarios, expandiendo lo que ha sido ya encontrado en la literatura financiera respecto a la influencia de estos acuerdos en cointegración.

Article
Publication date: 21 September 2020

Qian Wang and Eric W.T. Ngai

This study aims to provide an objective analysis of the state-of-the-art and intellectual development of publications related to event study methodology in business research.

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Abstract

Purpose

This study aims to provide an objective analysis of the state-of-the-art and intellectual development of publications related to event study methodology in business research.

Design/methodology/approach

The sample includes 1,219 papers related to event study methodology, covering all business disciplines and spanning 34 years from 1983 to 2016.

Findings

Through three stages of primary analysis, namely, initial sample, citation and co-citation analyses, the authors identified the publication trends, supplementary techniques, influential publications and intellectual clusters in the area of event study methodology in business.

Research limitations/implications

The findings serve as a benchmark for the extensive literature related to event study methodology in business and may facilitate the transference of the amassed useful techniques among disciplines and the identification of future research directions.

Originality/value

The current study represents as a pioneering effort to review event study-related publications using bibliometric analysis.

Details

Industrial Management & Data Systems, vol. 120 no. 10
Type: Research Article
ISSN: 0263-5577

Keywords

Article
Publication date: 10 June 2020

Kylie A. Braegelmann and Nacasius U. Ujah

This paper aims to revisit the extant evidence on gender bias in the market. Specifically, it revisits reaction to CEO announcements. Also, it explores whether the development of…

Abstract

Purpose

This paper aims to revisit the extant evidence on gender bias in the market. Specifically, it revisits reaction to CEO announcements. Also, it explores whether the development of the bias over time and by firm size aligns with existing theory.

Design/methodology/approach

The paper examines cumulative abnormal returns around CEO announcements from 1992 through 2016 using a modified event study methodology. This evidence shown examines market reactions over time and by firm size.

Findings

Financial markets react more favorably to male CEO announcements, with a cumulative abnormal return of 49 basis points above the reaction to their female counterparts. Moreover, the paper finds that market reaction varies over time, which may be because of the increasing proportion of female CEOs, and by firm size, which may be due to the differences in new information available to investors.

Research limitations/implications

Limitations include sample size due to the paucity of female CEO announcements. This paper does not examine the effect of industry, detailed CEO characteristics or announcement content on market reaction. In addition, using an extended event window may increase the likelihood of capturing confounding events, such as mergers or earnings announcements, which limits the interpretability of the results.

Practical implications

Gender bias in financial markets creates another institutional barrier for the advancement of female professionals, as well as implies inefficient capital allocation in markets.

Originality/value

The literature in this field is still inconclusive. Furthermore, bias development over time and the effect of information on bias remain unexplored. This study aims to fill that gap; furthermore, it introduces an extended event-window approach.

Details

Managerial Finance, vol. 46 no. 10
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 3 July 2017

Jaideep Chowdhury and Sourish Sarkar

While store closure announcements frequently appear in newspapers, little is known about the financial impact of store closure decisions on the retailer’s market value. The…

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Abstract

Purpose

While store closure announcements frequently appear in newspapers, little is known about the financial impact of store closure decisions on the retailer’s market value. The purpose of this paper is to investigate the stock market reaction to the announcements of retail store closure decisions.

Design/methodology/approach

The authors collect data from news articles on store closure announcements in the USA during 1995-2016. Using the four-factor model in an event study, the authors compute the abnormal stock returns for the retail firms due to these announcements.

Findings

Based on the authors’ analysis for sample and matching control firms, the abnormal stock returns for store closure announcements are found to be positive overall. The authors find evidence that the positive effects of the announcements are stronger, particularly for the firms which have positive sales growth at the time of the announcements. The authors also report that industry competition acts as a negative moderator in the relationship between announcements and financial impacts.

Practical implications

The authors’ analysis implies the investors’ positive sentiment of store closure announcements as a viable cost-cutting strategy, especially when it is done proactively by better performing retailers. The findings should be useful to the supply chain managers of retail industries in making store closure decisions.

Originality/value

This paper is believed to be the first to address the impact of retail store closure announcements on the stock market. The authors’ approach of categorizing the firms based on their sales growth seems to be the first in the event study literature on corporate restructuring.

Details

International Journal of Physical Distribution & Logistics Management, vol. 47 no. 6
Type: Research Article
ISSN: 0960-0035

Keywords

1 – 10 of over 1000