Do market predictions affect its reaction to UK listed industrial firms' corporate refocusing announcements?

Chun Yu Mak

doi:10.1016/j.bar.2014.11.002

Do market predictions affect its reaction to UK listed industrial firms' corporate refocusing announcements?

Chun Yu Mak

Accounting

Research output: Contribution to journal › Article › peer-review

1 Citation (Scopus)

224 Downloads (Pure)

Abstract

This paper investigates market reaction to firms' refocusing announcements from the perspective of investors' predicted probability. The results reveal the following: Firstly, the market reaction is significantly positive if managers announce the refocusing in the month when investors' predicted probability is high. Secondly, there is no significant market reaction if managers announce refocusing in the month when investors' predicted probability is low. Thirdly, the association between stock returns and investors' high predicted probability is significantly negative if managers fail to announce refocusing. Fourthly, the association between stock returns and investors' low predicted probability is significantly positive if managers did not announce refocusing.

Original language	English
Journal	The British Accounting Review
Early online date	14 Nov 2014
DOIs	https://doi.org/10.1016/j.bar.2014.11.002
Publication status	Published - Nov 2014

Keywords

Corporate refocusing activities
Prediction
Rare event
Cutoff probability
Market reaction

Access to Document

10.1016/j.bar.2014.11.002

Mak_Do_market_predictions_affect_British_Accounting_Review_2014
NOTICE: this is the author’s version of a work that was accepted for publication. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published as Mak, C.Y., Do market predictions affect its reaction to UK listed industrial firms’ corporate refocusing announcements?, The British Accounting Review (2014), doi: 10.1016/j.bar.2014.11.002.
Accepted author manuscript, 738 KBLicence: Other (please specify with Rights Statement)

http://linkinghub.elsevier.com/retrieve/pii/S0890838914000730

Cite this

@article{a62ba11d371f41e0a875bd645b688a1b,

title = "Do market predictions affect its reaction to UK listed industrial firms' corporate refocusing announcements?",

abstract = "This paper investigates market reaction to firms' refocusing announcements from the perspective of investors' predicted probability. The results reveal the following: Firstly, the market reaction is significantly positive if managers announce the refocusing in the month when investors' predicted probability is high. Secondly, there is no significant market reaction if managers announce refocusing in the month when investors' predicted probability is low. Thirdly, the association between stock returns and investors' high predicted probability is significantly negative if managers fail to announce refocusing. Fourthly, the association between stock returns and investors' low predicted probability is significantly positive if managers did not announce refocusing.",

keywords = "Corporate refocusing activities, Prediction, Rare event, Cutoff probability, Market reaction",

author = "Mak, {Chun Yu}",

year = "2014",

month = nov,

doi = "10.1016/j.bar.2014.11.002",

language = "English",

journal = "The British Accounting Review",