The Market Valuation Of Pre-Registration For Firms In The Online Gaming Industry

Under the uncertainty of market conditions, top management and shareholders keep seeking evidence for whether a new product development project truly improves firm value. In an effort to find the evidence, this study examines the effect of firm’s innovative outcome on stock market performance. Specifically, we conduct an event study to test whether stock market reacts to pre-registration marketing campaign in online game. In the business practice, the pre-registration is often considered as an important event right before the commercialization of a new game launch. In our empirical analysis on the pre-registration events and daily stock returns of game companies in 2010-2014, we find that stock market responds to the pre-registration event of a new online game positively, with the abnormal returns up to 1.49%. In addition, the stock market rewards the pre-registration events of small firms more than that of large firms. Overall results suggest that stock investors take into account the pre-registration event as economically valuable information and perceive the uncertainty of the innovation process resolved.

Influence of Momentum Effect on Stock Performance of Firms Listed in the Nairobi Securities Exchange

This research article intended to establish the influence of momentum effect on stock performance of firms listed in Kenya. Nairobi Securities Exchange (NSE) is the most robust securities market in Eastern and Central Africa and among the best performing in the African continent. Despite this, there is still a lot to be desired in terms of upholding the efficient market hypothesis. Stocks here do not always uphold this theory despite the fact that the NSE is among the few African exchanges that are not weak form efficient. This study looked at all the listed firms in the NSE for the period between January 2004 to December 2015. The research was based on the efficient market hypothesis and behavioral finance theories. Descriptive research design was used and target population was all the listed firms in the NSE. Secondary data was used in the analysis where the researcher used market prices and risk free interest rates. These were obtained from the data vendors at the NSE and website of Central Bank of Kenya. Caharts four factor model was used in the analysis and hypothesis was tested using 0.05 level of significance. The researcher conducted diagnostic tests such as normality, linearilty and collinearity tests. Missing values in the data collected were corrected by the use of linear interpolation. The diagnostic tests showed that the data was good for analysis. Z test results showed that the momentum effect was statistically significant at 0.0165. The model was also statistically significant showing that the momentum effect influenced the returns for NSE at about 25.8%. the null hypothesis was therefore rejected. It was concluded that NSE stocks over the span of 12 years studied demonstrated momentum effect. Future researchers would be advised to study the momentum effect on a shorter span like 12 months where they are working with weekly prices. The researcher would also recommend future scholars to do a regional comparative study

A study of investor response to new product launching: a competitive strategy approach / Eliyani Linda R. and Utami Wiwik.

This study examines investor response to the announcement of new product launching. The research design was event study methodology,where the researchers want to test empirically the investor response to new product launching by considering the business strategy used by each firm. Population of study was all firms listed in Indonesia Stock Exchange, except firms in the financial industry during 2009-2012. The samples were firms that announced their new products, and were selected based on certain criteria. During the period there were 63 announcements of new product launching from 27 firms. Rivals were identified for comparative analysis purpose. All firms in the same sub sector were considered as rivals. The announcing firms and its rivals were identified into competitive strategy group (strategic substitutes, strategic complements), by employing Competitive Strategy Measure in reference to Sundaram, John and John (1996). In this study the announcement-period was two days before and after the announcement date. The analysis was performed by comparing, before and after, Cumulative Abnormal Return (CAR) for each event of the announcing firms. The average cumulative abnormal return of the announcement period of announcing firms was then compared between strategy groups (strategic substitutes, strategic complements). In addition, CAR was compared between announcing firms and its rivals in strategic substitutes group, and in strategic complements group. The comparative study showed that the announcing firms in strategic substitutes group gained higher return than the announcing firms in strategic complements group. There was no significant difference between the announcing firms and its rivals, neither in strategic substitutes nor in strategic complements

The impact of new product announcements on stock prices: case for the technology sector in the USA

1 online resource (iv, 30 leaves) : ill.Includes abstract and appendix.Includes bibliographical references (leaves 26-28).Technology products are becoming one of the major sources for our daily life. In this modern life, technology products have already become necessary needs. This paper will examine the effect of new product announcements on the share price in the stock market, especially on the technology sector in the US market. An analysis of 51 technical products announcement events is included in this test. The results showed the negative impact on share price after firms announce new products into the market. Shareholders could not generate abnormal returns within 35 days after the announcement date. There is a statistically significant negative impact on abnormal return between days 35 to 40

Firm Value Effects of Global, Regional, and Local Brand Divestments in Core and Non-Core Busienesses

Cataloged from PDF version of article.In this article, we investigate the effect of brand divestments on firm value. We integrate two common motives for focus-increasing brand divestitures—global branding and refocusing on core businesses—in a single common framework. In particular, we investigate the effects of divesting local/regional/global brands in core businesses and local/regional/global brands in non-core businesses on firm value. Analyzing 205 divestment announcements in the global food and beverages industry, we find that, in most cases, brand divestments destroy firm value. Only when firms divest local or regional brands in non-core businesses is the effect on firm value positive

Exploring the Sources of Design Innovations: Insights from the Computer, Communications and Audio Equipment Industries

Whereas business research has focused on the impact of design innovations on market response and financial performance, the sources of design innovations, as opposed to those of technological innovations, have largely escaped investigation. In this research, we examine the organizational, financial, and environmental drivers of design innovations and how they contrast to technological innovations. Our study utilizes a unique dataset encompassing a 10-year window of innovation output drawn from the computer, communications, and audio and video equipment manufacturing industries. Our results suggest that design innovations are driven primarily by investments in research and development and slack organizational resources. Interestingly, we find that design innovations are more prevalent in smaller but fast-growing markets as opposed to technology innovations, which are prevalent in larger markets. Contrary to expectations, we find no association between marketing investments and design innovations. Our research contributes to the extant business literature by considering the sources of design innovations separately from the sources of technology innovations. We also contribute to the literature by distinguishing design and technology patents, developing a deeper understanding of design innovation, and illuminating a lesser understood source of competitive advantage for firms

Effects of Securities Behaviour on Performance of Nairobi Securities Exchange Indices

This study aimed at establishing the Influence of investor’s behaviour on the performance of Nairobi Securities Exchange (NSE) indices. A reliable security market index should assist investors in making investment decisions but this is not always the case: investors at times invest in stock whose performance is not reflected in the indices. This study was guided by specific objectives which included: to establish the Influence of momentum effect, financial contagion, white noise effect, Security Price Volatility, and Herding Effect (all as independent variables) on performance of NSE indices as the dependent variable. This study was anchored to finance theories such as random walk theory, rational bubbles theory, smart money and noise trader’s theory, price formation and discovery theory, and information disclosure theories. The study was based on a period of 12 years starting from January 2004 to December 2015. The population of this study comprised of all the market participants at the NSE and thus a census approach was adopted where study period was done based on each specific objective. This research relied on primary data. Primary data was collected from all the market participants. In data analysis, a significance level of 5% was used on all objectives and a multiple regression model on each objective was used. The Statistical Package for Social Sciences (SPSS) was used on primary data for analysis. The findings for primary data showed all the indices to be insignificantly influenced by the securities behaviour but the overall NSE indices performance was statistically affected. Hypotheses were tested at 0.05 level of significance. The first hypothesis on momentum effect was not rejected on primary. The second hypothesis on financial contagion was rejected and.on the hypothesis of white noise effect, it was not rejected. The hypothesis of Security Price Volatility effect was not rejected while hypothesis of herding effect was rejected. It was concluded that all the indices play a complimentary role thus the need for the retention of all. NSE is highly contagious of the events that happen around it. The study recommends that future researchers should increase the respondents to also include investors. For the objective of momentum effect, the study recommends that more exchanges be included to get a finer detail. NSE and CMA should ensure that information availed to the researchers is obtained at minimal cost or for free to encourage more research into the security markets. Keywords: Momentum Effect, Financial Contagion, White Noise Effect, Share Price volality effect, Herding Effect and Nairobi Securities Exchange Indice

Do Innovations Really Pay Off? Total Stock Market Returns to Innovation

Critics often decry an earnings-focused short-term orientation of management that eschews spending on risky, long-term projects such as innovation to boost a firm's stock price. Such critics assume that stock markets react positively to announcements of immediate earnings but negatively to announcements of investments in innovation that have an uncertain long-term pay off. Contrary to this position, we argue that the market's true appreciation of innovation can be estimated by assessing the total market returns to the entire innovation project. We demonstrate this approach via the Fama-French 3-factor model (including Carhart's momentum factor) on 5,481 announcements from 69 firms in five markets and 19 technologies between 1977 and 2006. The total market returns to an innovation project are $643 million, more than 13 times the$49 million from an average innovation event. Returns to negative events are higher in absolute value than those to positive events. Returns to initiation occur 4.7 years ahead of launch. Returns to development activities are the highest and those to commercialization the lowest of all activities. Returns to new product launch are the lowest among all eight events tracked. Returns are higher for smaller firms than larger firms. Returns to the announcing firm are substantially greater than those to competitors across all stages. We discuss the implications of these results.innovation, market returns, event study, Fama-French 3-factor model, high-tech marketing