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Measuring the Impact of Corporate Investment Announcements on Share Prices: The Spanish Experience

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  • Esther B. Del Brio
  • Javier Perote
  • Julio Pindado

Abstract

We bring together three disparate strands of literature to develop a comprehensive empirical framework to examine the efficiency of security analysts' earnings forecasts in Singapore. We focus specifically on how the increased uncertainty and the negative market sentiment during the period of the Asian crisis affected the quality of earnings forecasts. While we find no evidence of inefficiencies in the pre‐crisis period, our results suggest that after the onset of the crisis, analysts (1) issued forecasts that were systematically upward biased; (2) did not fully incorporate the (negative) earnings‐related news; and (3) predicted earnings changes which proved too extreme.

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  • Esther B. Del Brio & Javier Perote & Julio Pindado, 2003. "Measuring the Impact of Corporate Investment Announcements on Share Prices: The Spanish Experience," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 30(5‐6), pages 715-747, June.
    • Handle: RePEc:bla:jbfnac:v:30:y:2003:i:5-6:p:715-747
    DOI: 10.1111/1468-5957.05254
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    5. Mehdi Nekhili & Afifa Wali Siala & Dhikra Chebbi-Nehkili, 2009. "Free Cash Flow, gouvernance et politique financière des entreprises françaises," Revue Finance Contrôle Stratégie, revues.org, vol. 12(1), pages 5-31, March.
    6. Lozano, M. Belén & Yaman, Serhat, 2020. "The determinants of cash flow sensitivity of cash: The family ownership effect," Research in International Business and Finance, Elsevier, vol. 53(C).
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    9. Wi Saeng Kim & Esmeralda Lyn & Tae‐Jun Park & Edward Zychowicz, 2005. "The Wealth Effects of Capital Investment Decisions: An Empirical Comparison of Korean Chaebol and Non‐Chaebol Firms," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 32(5‐6), pages 945-971, June.
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    12. Julio Pindado & Chabela De La Torre, 2006. "The Role of Investment, Financing and Dividend Decisions in Explaining Corporate Ownership Structure: Empirical Evidence from Spain," European Financial Management, European Financial Management Association, vol. 12(5), pages 661-687, November.
    13. Liang Li, 2012. "How Much Are Resource Projects Worth? A Capital Market Perspective," Economics Discussion / Working Papers 12-13, The University of Western Australia, Department of Economics.
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