Information content effect

Information content effect

The rise in the stock price following a dividend signal, or publication of some other related news.

Information Content Effect

An increase or decrease in a security's price resulting from some relevant information. For example, a stock my rise in price following a positive earnings report or fall in price if the company's CEO is arrested. To reduce the information content effect, many companies seek to price out the information by hinting or building expectations before the official announcement.
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