Announcement Effect


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Announcement Effect

A change in security prices or volatility as a result of some announcement. For example, if the Federal Reserve raises interest rates, stock prices are liable to fall. Likewise, if a company announces an acquisition, its stock may rise. The announcement effect may cause drastic price changes; as a result, companies and governments often selectively leak or hint at announcements before they occur to minimize surprises. The announcement effect is also called the signal effect. See also: Price out the News.
References in periodicals archive ?
First, it increases our understanding of the SEO announcement effect and postissue long run underperformance by providing new evidence for the agency explanation.
Youngblood attributes the sharp run-up in interest rates in 2013 to "the announcement effect, whereby the market prematurely expected the Fed to start assets sales and move from accommodation to a restrictive monetary policy.
The increase in noise raises the tax option value of the stock and it is this value that generates the announcement effect of stock splits.
Conservatives demand fiscal austerity, the announcement effect of which will somehow attract global capital.
If there is significant announcement effect of the stock prices, the null hypothesis of equal mean is rejected in favour of alternative hypothesis of equal mean.
Recently, CLR have presented evidence from a six-factor term structure model that indicates that the announcement effect of the TAF had a very large effect on the LIBOR rate.
The G-7) rather aimed to have an announcement effect,'' he said, referring to the possible impact on markets, which could discourage investors from betting on the yen one-sidedly.
The studies related to dividends in Malaysia considered did not focus on the announcement effect of the specially designated dividends, but regular dividends.
The average announcement effect is significantly more negative for mergers of overconfident CEOs (-90 basis points) than for those of their non-overconfident peers (-12 basis points).
In this article we document a positive announcement effect when a publicly traded company discloses that it has partially or fully frozen its DB plan and replaced it with--or enhanced--the 401(k) defined contribution (DC) plan.
In India Gupta and Gupta (2007) studied split event from 1999 to 2004 taking 60 stocks and find a mixed announcement effect.
Markets are fragile at the moment and there was a visible announcement effect -- markets afraid that as liquidity is mopped up, then some risk appetite may go with it," said Adam Carr, senior economist at ICAP Australia.