Shock events: The impact of news media and communication strategies on listed companies’ share price
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Received March 3, 2022;Accepted March 31, 2022;Published April 1, 2022
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Author(s)Link to ORCID Index: https://orcid.org/0000-0002-3494-9172Link to ORCID Index: https://orcid.org/0000-0002-3227-6074
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DOIhttp://dx.doi.org/10.21511/imfi.19(1).2022.26
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Article InfoVolume 19 2022, Issue #1, pp. 334-349
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Cited by4 articlesJournal title: Journal of Economics and International RelationsArticle title: Іmprovement financial management of enterprise taking into account technologies for attracting additional financial resourcesDOI: 10.26565/2310-9513-2023-17-09Volume: / Issue: 17 / First page: 94 / Year: 2023Contributors: Kateryna Oriekhova, Оlena Golovko, Оlena Khristoforova, Maksym BabenkoJournal title: Social EconomicsArticle title: STRATEGIC PROVISING OF ENTERPRISE FINANCIAL SECURITY IN COVID-19 CONDITIONSDOI: 10.26565/2524-2547-2022-64-07Volume: / Issue: 64 / First page: 63 / Year: 2022Contributors: Kateryna Oriekhova, Olena Golovko, Pavel GaydaJournal title: Applied Mathematics and Nonlinear SciencesArticle title: Using Game Theory to Analyze the Effects of Different News Communication Strategies on Public Opinion FormationDOI: 10.2478/amns-2024-2900Volume: 9 / Issue: 1 / First page: / Year: 2024Contributors: Haibo ZhuJournal title: Social EconomicsArticle title: IMPLEMENTATION FEASIBILITY OF ENTERPRISE FINANCIAL CONTROLINGDOI: 10.26565/2524-2547-2023-66-06Volume: / Issue: 66 / First page: 49 / Year: 2023Contributors: Olena Golovko, Nataliya Tretiak, Kateryna Oriekhova
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Academics studied the theory of a company’s communication when it is involved into a crisis but they were less concerned about the impact of the communication on a listed company’s share price, especially when it resulted from a shock event. There is a lack of information about the role played by news media. The aim of this paper is to investigate if in cases of shock events (i) a company’s response strategy has a different effect on shareholders, observing the effect on share prices, and (ii) how the news media can affect the value change. Using the event study methodology, the Cumulative Abnormal Return of companies’ share prices involved in shock events was calculated. Statistics show a best effect of an accommodative response than a defensive strategy in cases of scandals and product recalls. There is no valuable impact of company communication in cases of incidents. With news media variable, the results show a worsening effect with bad news and a mitigating effect with good news. It was proved that the impact of a response strategy is surpassed by news media. When there is absolute certainty of guilt for a given situation, it is more convenient for management to apologize, and when there is no certainty, there was no substantial difference, because in the mind of an investor the focus shifts to the event itself. The news media has been shown to have a huge impact on investor perception, even more so than a company’s best response strategy.
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JEL Classification (Paper profile tab)G14, G41
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References37
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Tables12
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Figures0
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- Table 1. All cases, CAR7. Descriptive statistics and statistical tests
- Table 2. Incidents
- Table 3. Scandals
- Table 4. Product recall
- Table 5. All cases, CAR7
- Table 6. Comparison between group couples
- Table A1. Incidents. Shock event descriptions
- Table A2. Incidents. Shock event announcement sources
- Table A3. Scandals. Shock event descriptions
- Table A4. Scandals. Shock event announcement sources
- Table A5. Product recall. Shock event descriptions
- Table A6. Product recall. Shock event announcement sources
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Conceptualization
Paola Fandella
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Funding acquisition
Paola Fandella
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Investigation
Paola Fandella
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Project administration
Paola Fandella, Guido Ceccarossi, Davide Attinà
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Resources
Paola Fandella
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Supervision
Paola Fandella
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Writing – original draft
Paola Fandella, Davide Attinà
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Data curation
Guido Ceccarossi, Davide Attinà
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Formal Analysis
Guido Ceccarossi, Davide Attinà
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Methodology
Guido Ceccarossi, Davide Attinà
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Validation
Guido Ceccarossi, Davide Attinà
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Conceptualization
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The impact of the COVID-19 outbreak on the Indian stock market – A sectoral analysis
Investment Management and Financial Innovations Volume 18, 2021 Issue #3 pp. 334-346 Views: 7366 Downloads: 3488 TO CITE АНОТАЦІЯThis paper aims to examine the impact of the COVID-19 outbreak on Indian firms listed on the NSE and analyze its impact on various sectors. In addition, a sub-sample analysis based on market capitalization was performed to understand the effect of size during extreme events. The sample consisted of 1,335 firms listed on the NSE India. A standard event study outlined by Brown and Warner (1985) was employed to analyze the price impact on the COVID-19 outbreak. The event windows from -10 days to +10 days were selected. The estimation window is 250 days. The Nifty 50 has been chosen as a proxy for market return. The sample firms witnessed a negative impact of the COVID-19 outbreak with a negative CAAR in different event windows. In addition, various sectors are classified according their responsiveness towards the COVID-19 outbreak into three groups: highly negatively affected, moderately negatively affected, and slightly negatively affected. The paper also points out that the pandemic substantially affects the above-median market capitalized firms than the below-median market capitalized firms, which contradicts the size effect phenomenon. The results assist shareholders in managing their portfolios and mitigate the systematic risk of their investments during extreme events such as a pandemic, wars, and others. This study is the first comprehensive analysis of the impact of the COVID-19 outbreak on different sectors in India. It is also the first study to investigate the size effect anomalies during extreme events.
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New market reforms and stock exchange liquidity: the case of Kuwait
Investment Management and Financial Innovations Volume 16, 2019 Issue #1 pp. 46-64 Views: 1850 Downloads: 188 TO CITE АНОТАЦІЯIn developing markets, new regulations are imposed to protect investors, to assure fairness and to enhance trust through controlling all types of market abuse. In addition, these regulations are imposed to enhance the overall market performance and efficiency. Market liquidity is one of the main pillars used to measure market overall performance. In this paper, the authors attempt to analyze market liquidity before and after the passage of the Capital Market Authority Law of 2010 (CMA), aimed at enhancing investors’ confidence and reinforcing better disclosure quality and accountability for Kuwait public companies. By introducing six liquidity measures that captures market depth, turnover, and volatility, the authors documented highly significant deterioration in all the measures following the CMA Law with more profound effect on smaller firms. The researchers concluded that overstated regulations in developing markets, in spite of its goal of improving market overall performance, structure, enhancing investors’ protection, and market integrity, can have an adverse effect on market efficiency.
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Investigating the efficiency of financial markets: Empirical evidence from MENA countries
Izzeddien N. Ananzeh doi: http://dx.doi.org/10.21511/imfi.18(1).2021.21Investment Management and Financial Innovations Volume 18, 2021 Issue #1 pp. 250-259 Views: 1100 Downloads: 371 TO CITE АНОТАЦІЯThe market efficiency hypothesis has become an important concept for all investors looking to own internationally diversified portfolios, which coincides with an increase in investment flows between all countries, both developed and undeveloped. This study was aimed at investigating the efficiency of a group of Arab stock markets located in the Middle East and North Africa (MENA) region according to the Random Walk Hypotheses (RWH) at weak form. The study covered the markets of Jordan, Egypt, Saudi Arabia, UAE, Bahrain, and Oman.
The empirical results of all tests used in this study rejected the RWH at a weak form for all markets through all tests applied – Unit root test, Variance Ratio Test, and Run Test.
The result of this study contradicts the results of many studies conducted on developed and emerging markets. This can be a good indication of the ineffectiveness of the reforms that have been adopted by responsible bodies on these markets.
Based on this result, all efforts made to expand and deepen these markets should be intensified by improving liquidity, transparency, enhancing investment culture in these countries; supporting legislative and regulatory reforms to attract investment, and developing the financial sector in these markets as a whole.Acknowledgment
This paper is supported by the Deanship of Scientific Research and Graduate Studies at Philadelphia University in Jordan.