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Article
Publication date: 12 December 2017

Bikram Jit Singh Mann and Sonia Babbar

The purpose of this study is to study the impact of new product announcements on the shareholder value in India since; there is lack of perceptive results regarding the impact…

362

Abstract

Purpose

The purpose of this study is to study the impact of new product announcements on the shareholder value in India since; there is lack of perceptive results regarding the impact. Also, an attempt has been made to analyse the determinants of value creation, by industry type, which has so far escaped the attention of researchers.

Design/methodology/approach

First, standard event study methodology has been used to measure the abnormal gains/losses of the announcing firms for the new product introductions. Second, regression analysis has been conducted to find out the relationship between the shareholder value and the firm and industry characteristic variables.

Findings

The results of the study show that the announcing companies in India have got significant positive returns during the announcement of the new product. The value stands at 0.00455 for the event day. In the second part, the application of the regression test has found that firm size, R&D intensity, free cash flow, debt ratio and market size are significant variables in the determination of the shareholder value.

Originality/value

The present study goes a step further in establishing the reasons for value creation when new product announcements are made by the Indian firms. The analysis has been carried out industry wise to identify the determinants of shareholder value in different industries. This would guide the decision makers at the strategic level and players of the stock market at large in taking much more informed decisions.

Details

Journal of Asia Business Studies, vol. 11 no. 4
Type: Research Article
ISSN: 1558-7894

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Article
Publication date: 29 November 2018

Bikram Jit Singh Mann and Sonia Babbar

Before introducing new products, companies make announcements regarding the launch of the product which influences stock market yields of the announcing companies. Information…

342

Abstract

Purpose

Before introducing new products, companies make announcements regarding the launch of the product which influences stock market yields of the announcing companies. Information content of the new product announcement has never been an exclusive focused stream of research. Therefore, an assessment of the impact of the content characteristics of the new product announcement on the shareholder value and the impact of source credibility (spokesperson) in making such announcements is a major gap in the existing literature. The paper aims to discuss these issues.

Design/methodology/approach

First, the standard event study methodology has been employed on the sample to measure the abnormal gains/losses accruing to the announcing firms. Second, moderated regression analysis (MRA) is employed to identify the characteristics of the new product announcement and to check the role of the spokesperson in creating shareholder value.

Findings

The results of the event study indicate that the abnormal returns are generated during the new product announcement. The results of MRA disclose the variables having a positive and a significant influence on the effective returns of the announcing companies. Likewise, the role of the spokesperson has come out brightly as a credible communicator.

Originality/value

The research provides a direction to the announcing companies regarding the content of the announcement leading to a positive perception among the investing community. Likewise, it also provides direction to the investor community about the characteristics of the announcement content they give weight age in forming a perception of strength in evaluating the new product announcement, to which they are largely unaware.

Details

International Journal of Emerging Markets, vol. 13 no. 6
Type: Research Article
ISSN: 1746-8809

Keywords

Available. Content available
Article
Publication date: 12 December 2017

Madhurima Deb

761

Abstract

Details

Journal of Asia Business Studies, vol. 11 no. 4
Type: Research Article
ISSN: 1558-7894

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