Differential Stock Market Reactions to the Presentation and Timing of the Announcements of Restructuring Charges and Write -Offs

Paik, Gyung Hyun

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Description

Title

Differential Stock Market Reactions to the Presentation and Timing of the Announcements of Restructuring Charges and Write -Offs

Author(s)

Paik, Gyung Hyun

Issue Date

2001

Doctoral Committee Chair(s)

Sougiannis, Theodore

Department of Study

Accountancy

Discipline

Accountancy

Degree Granting Institution

University of Illinois at Urbana-Champaign

Degree Name

Ph.D.

Degree Level

Dissertation

Keyword(s)

Economics, Finance

Language

eng

Abstract

I set up three hypotheses that predict the association between the true firm quality, the decisions regarding announcement and announcement type, and the market reactions to the announcement. I then develop a two-dimensional framework based on the presentation and timing of the announcements to analyze the effect of management's communication to investors. I use a sample of announcements of large negative special charges that were announced during 1986--1992, when the managers of firms had a great deal of discretion in announcing special charges. The results are consistent with a signaling scenario. Corporate managers intentionally choose presentation and timing of special charge announcements, using the flexibility allowed under the absence of relevant accounting rules, in order to send a signal to reveal their true quality to investors. Also, the market interprets the signal appropriately.

Graduation Semester

2001

Type of Resource

text

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http://hdl.handle.net/2142/87148

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