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| Tekijä: | Chung, K. H. Wright, P. Charoenwong, C. |
| Otsikko: | Investment opportunities and market reaction to capital expenditure decisions |
| Lehti: | Journal of Banking and Finance
1998 : JAN, VOL. 22:1, p. 41-60 |
| Asiasana: | INVESTMENTS CAPITAL EXPENDITURE COMPANIES SHARES PRICES |
| Kieli: | eng |
| Tiivistelmä: | In the study, it is argued that share price reduction to a firm's capital expenditure decisions depends critically on the market's assessment of the quality of its investment opportunities. It is postulated that announcements of increases (decreases) in capital expenditures positively (negatively) affect the stock prices of firms with valuable investment opportunities. Contrarily, it is predicted that announcements of increases (decreases) in capital spending negatively (positively) affect the share prices of firms without such opportunities. The empirical results of the study are generally consistent with these predictions. Overall, empirical evidence supports our conjecture that it is the quality of the firm's investment opportunities rather than its industry affiliation which determines the share price reaction to its capital expenditure decisions. |
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