Abnormal Stock Returns and Volume Activity Surrounding Lodging Firms' CEO Transition Announcements

Abstract

This research empirically investigates the impact of lodging firms' chief executive officer (CEO) transition announcements on stock performance and trading activity. Specifically, the study utilizes both parametric and non-parametric event study measures to investigate abnormal stock returns and volume activity during the periods surrounding the announcement of CEO transitions at lodging firms. The study finds significant negative abnormal returns in the periods before and after the announcement of a CEO transition. This suggests that the market did not perceive CEO transitions at lodging firms as value-enhancing events. Regarding trading volume, the study finds a decline in trading activity thirty days prior to announcement, but high trading activity during the immediate period surrounding announcements (5 days before the announcement date and 5 days after). This suggests investor uncertainty regarding the direction and value of the stocks of sampled firms. To minimize the negative impact on stock price and trading volume, it is important that lodging firms plan CEO transitions carefully and provide sufficient and timely information to stakeholders about new CEOs, their background and the value they will add to the firm. Such actions could assuage the negative impact of CEO transition announcement on firm value.

Is Indonesia Stock Exchange Semi-Strong Form Efficiency?

“…Based on the analysis, it is found that there is a market reaction with the information of Warrant publishing, it can be said that the Indonesian capital market, including capital markets is the form of semi-strong efficiency because the securities prices fully reflect all published information that is in the financial statements of the issuer's company. In other words, investors cannot obtain upper normal profit levels by utilizing publicly available information with the issuance of Warrant (Fama, 1970), (Reilly and Brown, 1997), (Aitken and Segara, 2005), ( Janiantari et al, 2014), (Ander andRaul, 2015), (Bloom, and Jackson, 2016), (Charles and Darné, 2016), (Lusyana, 2017) and (Syed and Bajwa, 2018).…”

Impact of cyberattacks on stock performance: a comparative study

“…Given the weakness of the simple test for AAR and CAAR, the study uses statistical tests that account for the effects of cross-section correlation in returns, returns series correlation, volatility changes, and skewness in the returns. Specifically, the study uses Patell Z (Patell, 1976), cross-sectional T, generalized sign Z (Cowan, 1992), StdCSect Z (Bloom and Jackson, 2016), generalized rank Z (Kolari and Pynnonen, 2011), adjusted Patell Z ( Kolari and Pynnönen, 2010), generalized rank T (Kolari and Pynnonen, 2011) and skewness corrected T (Hall, 1992).…”

“…First, cross-section analysis was performed, where all the 96 firms are considered in one sample. Estimating the cumulative firms’ reaction to the cyberattacks, test statistics Patell (1976), cross-sectional T, generalized sign Z (Cowan, 1992), StdCSect Z (Bloom and Jackson, 2016), generalized rank Z (Kolari and Pynnonen, 2011), adjusted Patell Z (Kolari and Pynnönen, 2010), generalized rank T (Kolari and Pynnonen, 2011) and skewness corrected T (Hall, 1992) were performed. These tests produce estimates that are robust to the above estimation problems.…”

Sudden crisis events and firms' stock price fluctuations: A multidimensional heterogeneity perspective

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