Does the market respond differently to the timing of the announcement of corporate actions?

Abstract

This study aims to expand research evidence related to investor responses to the timing of corporate action announcements. In contrast to previous studies, this study distinguishes corporate action announcements during the development and realization stage. Furthermore, we will also distinguish the types of corporate actions, consisting of new products and systems and technology innovation. Investor’s reactions are measured using cumulative abnormal returns (CAR) with (−5,+5) and (−2,+2) event windows. The Sample is based on 257 corporate action announcements in the automobile manufacturing firms in East Asia from 2017 to 2021. This research found a significant difference in CAR between the development and realization of announcements. Furthermore, it indicates that investors in East Asia react more positively when companies announce the realization of a new product and system and technology innovation rather than when it is still under the planning or development process.