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| Author: | Poon, P. S. Newbould, G. D. Durtschi, C. |
| Title: | Market Reactions to Corporate Restructurings |
| Journal: | Review of Quantitative Finance and Accounting
2001 : MAY, VOL. 16:3, p. 269-290 |
| Index terms: | FINANCE ACCOUNTING INFORMATION SHARE PRICES STOCKS |
| Language: | eng |
| Abstract: | This article examines the stock price reactions to restructuring announcements by the DJIA 30 corporations over the period 1988-1995 by employing the event study methodology and cross-sectional regression analyses. Corporate restructurings, historically regarded as highly unusual accounting events, became increasingly common after 1987. One probable cause is the discretionary power managers enjoy due to the flexibility allowed by the Accounting Principles and Financial Accounting Standards Boards. The authors' general findings are that, contrary to contemporary press comments, restructurings, especially those impose a charge against the firm's earnings, are typically associated with negative excess returns. |
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