Stock Price Reaction to Non-financial News in European Technology Companies

Beatriz Cuellar Fernandez, Yolanda Fuertes () and Jose Antonio Lainez Gadea

European Accounting Review, 2011, vol. 20, issue 1, 81-111

Abstract: In this paper we examine investors' valuation of non-financial corporate news items issued by European companies in the information and communications technology industry. We analyse the stock market reaction to the publication of press releases on a sample of 145 firms from 2003 to 2005. Results indicate that investors react positively to information concerning a firm's capacity to consolidate its position, diversify and grow. Investors react negatively to information about new product launches and upgrades. We also find that investors in companies with a strong market position and growth prospects highly value information on takeovers and internationalisation. In contrast, investors in low-performing companies value news of disposals and distribution alliances. Our results enhance the general understanding of the relevance of non-financial information to investors, and contribute to the debate surrounding the usefulness of publishing non-financial information.

Date: 2011
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DOI: 10.1080/09638180903384650

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