Stephen J. Larson and Armand Picou
This paper examines the effects of contract award announcements on the stock returns of successful grantees. Contract awards are identified using Lexis/Nexis and classified…
Abstract
This paper examines the effects of contract award announcements on the stock returns of successful grantees. Contract awards are identified using Lexis/Nexis and classified according to whether the grantor is another corporation or government body. The government grantors are further classified according to the type of government entity granting the contract. Four subsamples emerge: federal (non-military), military, municipal, and foreign. The results suggest that contract awards granted by foreign governments are more lucrative than contract awards granted by corporations or American governmental bodies. This finding endures even after controlling for potentially confounding factors.
Emilio Zarruk and Armand Picou
The 1987 Single European Act's intended goal is to unify European member nations. The Act provides a series of steps over time that dismantles the various trade barriers between…
Abstract
The 1987 Single European Act's intended goal is to unify European member nations. The Act provides a series of steps over time that dismantles the various trade barriers between the European Economic Community (EEC) members. The main economic reforms, reduced trade and increased capital flows, combine disparate goals and government policies to enhance the economic efficiency of EEC members. The EEC economic system is therefore changing to create a globally competitive community of nations with efficient internal trade and capital markets.
Bo Ouyang, Armand Picou and Brian Elzweig
This paper seeks to explore empirically the shareholder reactions to an officer leave of absence (OLOA) announcement.
Abstract
Purpose
This paper seeks to explore empirically the shareholder reactions to an officer leave of absence (OLOA) announcement.
Design/methodology/approach
A standard event study methodology is applied to daily stock holding period returns. The sample studied consists of 104 firms announcing an OLOA and is further delineated by both reasons offered and the title of the officers in the event. A cross‐sectional analysis is used to study the reactions found.
Findings
The paper documents a statistically significant negative response from shareholders: a 4.9 percent mean loss across 104 firms in the sample. Cross‐sectional results indicate that board independence and the passage of the Sarbanes‐Oxley Act of 2002 (SOX) influence abnormal returns.
Practical implications
The evidence in this study clearly suggests the value‐relevance of the OLOA announcements. Therefore, a thorough understanding of the impact of OLOA announcements on firm value is important to investors.
Originality/value
Event studies of management turnover primarily focus on the event of formal executive turnover per se and largely ignore events of temporary turnovers. This paper examines market response to OLOA (a corporate event that may precede permanent management turnover). It uncovers varied significant market reactions. Some insignificant results in prior event studies may be partially explained by information released through preceding events of temporary turnovers.
Details
Keywords
The study is a test for the existence of an international stock market anomaly.
Abstract
Purpose
The study is a test for the existence of an international stock market anomaly.
Design/methodology/approach
To test for holiday anomalies over a ten year period, the study examines six major international indices using dummy variable regressions with continuous data and simple regression analysis with discrete data points.
Findings
Evidence is presented both for the existence of an ex‐post holiday anomaly for all exchanges tested and for the international effect of the ex‐post holiday reaction on other exchanges. The results differ from all prior holiday anomaly studies in finding a significant holiday reaction following, not preceding, the holiday.
Practical implications
Future holiday periods may be used to capture profits from closed markets.
Orginality/value
The findings are of value to international portfolio managers and investors.
Details
Keywords
Michael Rubach and Armand Picou
The purpose of this paper is to examine the stock price reaction to the first announcement in SEC filings of the enactment of corporate governance guidelines. Agency and…
Abstract
Purpose
The purpose of this paper is to examine the stock price reaction to the first announcement in SEC filings of the enactment of corporate governance guidelines. Agency and management theories suggest the enactment of guidelines should create value for the owners.
Design/methodology/approach
The paper uses an event study methodology on a sample of 141 firms.
Findings
The research finds only a few firms exhibited a significant reaction. Overall, the data were not significant. Searching for first‐ or late‐mover advantages was also unsuccessful. However, the increased enactment of guidelines (bandwagon effect) supports first order imitation possibly due to the board interlocks found. The results indicate two possible explanations. First, SEC filings may not be a strong signal for the overall market resulting in a potentially unrealized stock value transferred to those few who act on the signal. Second, the value of the guidelines may be unclear to investors. In either case, more public disclosure (i.e. greater transparency) for the adoption of corporate governance guidelines may resolve the issue.
Originality/value
This paper provides valuable information on the value of corporate governance guidelines.