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 ?
The money announcement effect on interest rates has been documented and discussed in many papers.
Just as leakage should be positively related to the level of asymmetric information (as explained earlier), the announcement effect in response to the management guidance should be positively related to asymmetric information (as explained in the previous paragraph).
Another aspect that can potentially have an impact on the announcement effect is the type of issue (public offering or private placement).
Additionally, the favorable announcement effect is stronger for good-governance firms in noncompetitive industries than in competitive industries.
Using a sample of private placements made on the Korean Securities Dealers Automated Quotations (KOSDAQ) from January 2000 to December 2010 and limiting it to only include first Secondary Equity Offerings (SEOs), this study examines the relationship between the announcement effects of equity private placements and lock-up and/or discount signals sent by distressed firms as well as healthy ones.
There are few studies about the right issue announcement effect on emerging markets.
Against this background, the study focuses on the internal mechanism of corporate governance and agency theory, while paying particular attention to the announcement effect of corporate governance failures on stock market prices.
Gupta (2007) provided evidence that there is no announcement effect associated with stock splits in India though there does exist a pronounced ex- day effect.
The solution proposed by Van Rompuy by changing Protocol 12 could have "an announcement effect knowing full well that this appeal might be deemed inadmissible by the Court.
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.