An Event Study Measures Economic Effect Of Corporate Event On Security Price

This is an inductive research where quantitative methods have been used. The quantitative analysis consists of stock price data acquired from the New York Stock Exchange and the results of audit regarding company 's internal control over financial reporting required by the Sarbanes Oxley Act.

Given the event date and stock price data, the EP and TP can be constructed in order to estimate the normal returns and abnormal returns respectively.

The weekly performance of IBM stock presented a contestant growth. One highlight of the falling of stock price in the 6th week in the investment period was when IBM presented the 3rd quarter financial report. The investors weren’t satisfied with the profit report which they expected to be better especially when other IT companies were doing well in the 3rd quarter. One mistake I made was that I didn’t follow closely to the financial report of the company; therefore, I missed the peak of the stock price. From this experience, I learned that financial reports and current news are important indicators of the stock price. By following closely to the current event and analyzing the financial report, investors can maximize the profit and also become more familiar to the market.

1. Historical prices for both the firms and BSE 500 were collected during the event period from day -60 to day +60, and Day 0 being the announcement day.

The premise of an efficient market is that stock prices adjust accordingly as information is received. The speed and accuracy of the pricing changes are a reflection of the strength of the market efficiency, where in theory a perfectly efficient market will re-adjust prices immediately and precisely with new information. The efficient market hypothesis aligns with beliefs about whether technical and fundamental analyses are useful in making investment decisions or whether a passive approach is appropriate. In a perfectly efficient market, these types of analyses are not able to predict stock price trends (based on market inefficiencies or price abnormalities) which could assist in portfolio positioning or investment management. However, some investors belive that the market pricing is not precise and that there are timing windows and pricing trends that can be identified through analysis of past performance and finding price abnormalities where all information is not correctly reflected in the stock price (Hirt, Block and Basu, 2006).

Efficient capital market “It was generally believed that securities markets were extremely efficient in reflecting information about the stock market as a whole” (Fama 1970). To extent that when there is new information about stock rise, the news was dispersed immediately and it affects the security 's price at that time.

It can fairly be said that an Investor considering an investment decision (whether to purchase, sell or hold stock) in publicly traded company acts on the basis of extensive information which is available by corporation to him until the last moment of his investing decision and try to determine the fair price of corporate stock. In the light of continuous creation of a particular impression of corporate affairs by the corporation, new information by corporate can vanish the importance of previous available information to investor. In the scenario only one kind of investors can get advantage over others, who is either very close to corporate operation (corporate officers) or can access nonpublic price-sensitive information to corporation

The weak-form efficiency cannot explain January effect. In semi-strong-form efficient market, to test this hypothesis, researchers look at the adjustment of share prices to public announcements such as earnings and dividend announcements, splits, takeovers and repurchases. As time goes, later tests tend to be not supportive to EMH. For instance, semi-strong-form efficiency cannot explain the pricing/earning effect. In strong-form efficiency, the highest level of market efficiency, Fama (1991) pointed out the immeasurability of market efficiency and suggested that it must be tested jointly with an equilibrium model of expected. However, perfect efficiency is an unrealistic benchmark that is unlikely to hold in practice.

The topic I have chosen to write about for my International Political Economy Event Analysis Paper is on the immigration issue in the United States. What does immigration mean? Immigration is a name we give people who come from a foreign country to settle in a country where they are not residents. A place where they do not have a citizenship, in that case they can only stay for a short amount of time then return back to their native country. A frequently asked question about immigrants is why do immigrants come to the United States, for what purpose? Well if we look at our history and the U.S. immigration before 1965 we can see that the United States experienced large amounts of immigrants coming from the time 1820s to 1920 seeking greater economic opportunities. Others such as the Pilgrims arrived in the early 1600s in search of religious freedom. Then from the 17th to 19th centuries, hundreds of thousands of African slaves were taken from their country against their will and exported to America. The first immigration law passed by Congress was in 1882 the act that excluded Chinese laborers from immigrating to the United States for ten years. In 1892 was the opening of Ellis Island, the country’s first federal immigration station, and today, the majority of the country’s immigrant’s come from Asia, Latin America, and Mexico.

Audit report is the consequence of auditing process and it is a major instrument of communication between auditor and financial statements ' user. This study attempts to examine the correlation between qualified audit report and share prices and returns in order to test information content of qualified audit report. A market-based study conducted on the

The aim of this paper is to determine the effects of stock prices following the announcement of audited financial reports of Slovenian and Croatian public interest entities. Our

To increase and maximize the wealth/value of shareholders, it is necessary that the company is competitive in their market and can reliably “earn a considerable return on its investments above their cost of capital” (Doyle, 2000). The increasing rates of return of well performing companies attract new investors who invest money to become shareholders. These outside funds from investors are essential for growth of businesses and the expansion into new markets. Measurements of generated shareholder returns over a certain time period deliver the company useful information on whether their objectives have been achieved or should be new adjusted (Atrill, 2009).

Immediately after World War II, many European nations felt it was important to unite the European nations to form a union for the economic and social benefits. However, the dream of a “Common European Union” is still quite far from reality. The EU is the England’s largest business partner. Almost fifty percent of Britain’s trade is with the EU. Now, Britain’s decision to leave the EU is a death blow to the EU. Today, the Brexit is viewed as the next big financial event since 2008 subprime crisis causing denton the global economy. History has exhibited that stock market plays a major role in any economy. Stock markets have been impacted by various macro and micro economic factors. Therefore, the main objective of this empirical paper is to investigate the pricing behaviour of the chosen benchmark indices(Sensex and Nifty) with respect to a major political event (Brexit referendum) and its implications for regulators, researchers and market participants.For the purpose of the study the data has been collected from 24-06-2015 to 19-07-2016 and the collected data has been tested for stationarity by applying ADF test. The event study methodology has been employed to determine the

As indicated by the case study S&P 500 index was use as a measure of the total return for the stock market. Our standard deviation of the total return was used as a one measure of the risk of an individual stock. Also betas for individual stocks are determined by simple linear regression. The variables were: total return for the stock as the dependent variable and independent variable is the total return for the stock. Since the descriptive statistics were a lot, only the necessary data was selected (below table.)

Using a sample of Indian Acquisitions in the period 2014-2016, we document the proof as to how the market would react on hearing the announcement of a merger or an acquisition. We use a sample of 100 Indian mergers and acquisitions between 2014 to 2016 to examine the interaction between the security price changes in response to the announcement of merger. We select to study India, because it is one of the largest growing economies and a favorite hub for business. With the amount of growth it has seen over the recent past, mergers and acquisitions in India is certainly the next big thing that will enable it to compete with the global economy. Our results provide evidence of communication between managerial and aggregate market valuations in