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 ?
On the other hand, Venkatesh (1989) shows that greater dividend initiation announcement effects are associated with decreased announcement effects for subsequent earnings announcements.
To examine whether the reactions of market participants depend on the direction of the revision, [TABULAR DATA FOR TABLE 2 OMITTED] we sort the sample of announcement effects by upward and downward revisions.
1) The role of these variables in explaining the announcement effects of product strategies and capital expenditures, which are equally important strategic investments and essential for the firm's long-term growth, has not yet been directly tested.
Loderer, Cooney, and Van Drunen report a negative stock price reaction to announcements of stock offerings, with no evidence that the decline is the result of adverse information about future cash flows, and some evidence (inconclusive) that the offer announcement effects are related to Merton's (1987) determinants of price elasticities.
If we find any relation between the announcement effects of equity issues, and therefore firm value, and institutional ownership, the direction of causality has to run from institutional ownership to firm value, not the other way around.
Cole, Eisenbeis, and McKenzie |4~ compared announcement effects of a sample of thrifts acquiring other thrifts through FSLIC assistance with a sample of unassisted thrift acquisitions taking place between 1980 and 1988.
For example, Jain |15~, Rosenfeld |30~, and Sicherman and Pettway |33~ find significant positive announcement effects when U.
This positive reaction is consistent with that found by Chan, Martin, and Kensinger |3~, who provide similar evidence for the R&D decisions of high-technology firms, and McConnell and Muscarella |8~, who document positive announcement effects for unexpected increases in capital expenditure decisions.
27) In any case, the announcement effects suggest that monetary policy was an important driver of financial market behavior in 2013.
This paper presents an examination of the relation of liquidity, transaction costs, and risk, and describes an investigation of macroeconomic indicator announcement effects on liquidity in the Japanese Government Bond (JGB) Futures market of the Tokyo Stock Exchange (TSE).
I partitioned the sample into those placements for which the comparison period (-120, -21) CAR was positive (positive momentum stocks) and those for which it was negative (negative momentum stocks) and tested the announcement effects for the 68 placements where there was a separate offering announcement.
Our work also relates to studies of announcement effects in the indexed markets, especially that of Beechey and Wright (2009), which also analyzes intraday data but is different in its focus on liquidity and the announcement adjustment process as opposed to price-level effects.