Spin-off and market reaction: what is The Wall Street Journal role?

Elvira Anna Graziano

International Journal of Markets and Business Systems, 2016, vol. 2, issue 2, 157-170

Abstract: Building on the pioneering study by Covey (1999), this paper addresses a central question: according to the iceberg model of system thinking, can media play a relevant role in the financial market structure and hence influence the behaviour of investors? This study identifies specialised press as a key-player in the financial market. Through analysis with an event study approach, the effect of publication of spin-off news in The Wall Street Journal (WSJ) between 2000 and 2013 on the abnormal returns of 179 listed companies has produced the following results: 1) top newspapers seem to affect stock prices while not providing any new information, when publication follows the announcement; 2) top newspapers have a significant impact on the behaviour of investors, when the publication of news precedes the spin-off announcement.

Keywords: restructuring; spin-offs; media; business systems; event study; systems thinking; market reaction; financial market structure; investor behaviour; abnormal returns; newspapers; stock prices; financial markets; stock markets. (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijmabs:v:2:y:2016:i:2:p:157-170

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