Market Reaction to Entry Timing of Corporate Capital Investment Announcement: Evidence from Announcement-Period Abnormal Returns and Analysts' Earnings Forecast Revisions

Sheng-Syan Chen () and Xuan-Qi Su ()
Additional contact information
Sheng-Syan Chen: Department of Finance, College of Management, National Taiwan University, 85 Roosevelt Road, Section 4, 106 Taipei, Taiwan, ROC
Xuan-Qi Su: Department of Finance, College of Management, National Taiwan University, 85 Roosevelt Road, Section 4, 106 Taipei, Taiwan, ROC

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2010, vol. 13, issue 04, 495-515

Abstract: The main purpose of this study is to investigate the relative advantages and disadvantages of first-mover hypotheses by examining the role of entry timing in the announcement effects of corporate capital investment. Our empirical results suggest that those firms first announcing their capital investment will experience greater share-price effects than the followers in the same industry. In addition, the financial analysts tend to revise upward their announcement-period earnings forecasts for those capital investment announcers, suggesting that announcements of capital investment convey positive information about the earnings prospects of the announcing firms. Furthermore, analysts' revisions of earnings forecasts subsequent to such announcements are more favorable for leading-announcer firms than the followers. Overall, our findings provide fully support for the first-mover advantages hypothesis, indicating the importance of the entry timing when announcing a corporate capital investment.

Keywords: Capital investment; entry timing; earnings forecasts; revisions (search for similar items in EconPapers)
JEL-codes: G1 G2 G3 (search for similar items in EconPapers)
Date: 2010
References: View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S0219091510002049
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:rpbfmp:v:13:y:2010:i:04:n:s0219091510002049

Ordering information: This journal article can be ordered from

DOI: 10.1142/S0219091510002049

Access Statistics for this article

Review of Pacific Basin Financial Markets and Policies (RPBFMP) is currently edited by Cheng-few Lee

More articles in Review of Pacific Basin Financial Markets and Policies (RPBFMP) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().