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Market reactions to financial distress announcements: Does the market react differently to different outcomes?

Abd Halim Ahmad, Nur Adiana Hiau Abdullah () and Kamarun Nisham Taufil Mohd ()
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Nur Adiana Hiau Abdullah: Universiti Utara Malaysia
Kamarun Nisham Taufil Mohd: Universiti Utara Malaysia

Economics Bulletin, 2016, vol. 36, issue 2, 601-608

Abstract: We examine market reactions to the financial distress announcements of listed firms in Malaysia. The sample consists of 236 financially distressed companies between 2001 and 2014. We investigate whether the market differentiates between the subsequently re-emerged and subsequently delisted firms at the time of financial distress announcements. The results suggest that there is evidence of differing reactions to distress announcements according to firms' outcomes. These results suggest that, at the time of financial distress announcements, the capital market differentiates firms based on the expected outcomes of the distress, showing that the market has insights into the expected outcomes of the financial distress.

Keywords: Market reactions; Malaysia; event studies; market adjusted returns (search for similar items in EconPapers)
JEL-codes: G1 G3 (search for similar items in EconPapers)
Date: 2016-04-14
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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