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Effects of announcements of reorganization outcome

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  • Tseng-Chung Tang

Abstract

Less is known about whether the market perceives the final resolution of post-reorganization filing to be idiosyncratic or to carry endemic implications for the corresponding industries. This study observes the presence of intra-industry information transfers; the magnitude and direction of the reactions in response to three separate resolution outcome differs in a systematic way across industry portfolios. Specifically, portfolio rivals that are affected by competitive realignments in the industry experience stock price reactions in the opposite manner to those of the distressed firms, thus suggesting dominant competitive effects. In addition, this study reveals that the discriminatory power and forecast performance of three hybrid neuro-fuzzy models are stable and unimpaired across time and are generally superior in classifying Rival Cumulative Prediction Error (RCPE-) candidates.

Suggested Citation

  • Tseng-Chung Tang, 2010. "Effects of announcements of reorganization outcome," Applied Economics, Taylor & Francis Journals, vol. 42(9), pages 1113-1124.
    • Handle: RePEc:taf:applec:v:42:y:2010:i:9:p:1113-1124
    DOI: 10.1080/00036840701721174
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    1. Tseng-Chung Tang, 2010. "The information content of reorganization procedures: contagion or competitive effects?," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 9(2), pages 141-161, August.
    2. Houdou Basse Mama & Alexander Bassen, 2013. "Contagion effects in the electric utility industry following the Fukushima nuclear accident," Applied Economics, Taylor & Francis Journals, vol. 45(24), pages 3421-3430, August.

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