The adjustment of stock prices to Wall Street journal corrections

John A. Helmuth, Ashok J. Robin and John S. Zdanowicz

Review of Financial Economics, 1994, vol. 4, issue 1, 69-77

Abstract: This paper employs standard event study methodology to study the response of stock prices to relatively unanticipated events in the ‘Corrections and Amplifications’ section of the Wall Street Journal. Our results indicate that the market reaction to these corrections is statistically significant. We also find that the market fully adjusts to all new information on the day of the unanticipated Wall Street Journal correction. We find no discernible pattern of abnormal returns after the event day. The main implication of these findings is that researchers conducting event studies and using the Wall Street Journal Index for event dates, should screen their data for corrections.

Date: 1994
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https://doi.org/10.1016/1058-3300(94)90006-X

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Persistent link: https://EconPapers.repec.org/RePEc:wly:revfec:v:4:y:1994:i:1:p:69-77

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