Investors’ to Reaction to Marketing and Financial Announcements in the Telecommunication Sector

This article investigates the reaction of investors in the Bahrain Bourse toward two types of signals from the telecommunication sector: Marketing and financial announcements made by corporate management. Using an event study, six events that were announced over the period of 2011-2014 by Batelco, the only listed Telecommunication Company in the Bahrain Bourse, have been thoroughly analyzed. Results highlight that, regardless of the type of signal, investors exhibited significant reactions to all the announcements. Investors reacted positively to the announcement of additions to investments, Batelco winning the award for best investor relations and slashing the broadband rates and negatively to change of management. Investors generated positive cumulative abnormal returns (CARs) on the event days as well as on the 21st days of four of these announced events, and generated negative abnormal returns in reaction to two of these events. This could be indicative that the Bahrain Bourse is inefficient in the semi-strong form in the telecommunication sector.