Several studies have evolved to deal with the determinants of stock market volatility. However, there exists a gap in literature with regards to the interrelation among the broad categories of factors that trigger stock market reaction namely company fundaments, technical factors and market sentiments. This paper provides a holistic and comprehensive theoretical review of drivers of stock markets' reaction as well as designs an interrelated conceptual framework of the factors that influence investors' decision making to fill the gap in literature. Brexit is presented as a case study to illustrate how investors and stock markets are affected by new events or information. This study will reveal some of the global staggering effects of Brexit at the end of trading on June 24, 2016 in areas such as currencies, stock markets, banks, commodities, bonds, automakers and homebuilders as well as hedge fund. Barely 24 hours after the results of Brexit were declared; global stock markets lost about $2 trillion in value. The British pound plunged to almost $1.33, its lowest level in over 30 years against the US dollar and gold proved to be one of the few safe havens for investors on that day. In order for investors to insulate themselves against loses from Black Swans events, the conclusion of this study recommends some protective mechanisms for investors which include avoidance of overexposure and stockpiling of cash.
This research studies the effect of new product introduction prize (NPIP) announcements on firm value, applying event study methodology to 509 NPIP announcements between the period of 2001-2015. Specifically, the study focuses on NPIP announcements made in the computer, electronic and communication industry (CECI). It analyzes the short-term effect of market value caused by NPIP announcements within two-day event window (Days-1 and 0) by using market model. We established that NPIP announcements are perceived by investors as positive news, resulting in significant positive cumulative abnormal returns (CARs). Having controlled for firm-specific effects, (reputation and R&D intensity), we observed that stock market responds more positively to NPIPs attained by small-sized firms than large-sized firms. In addition, stock market reaction to firms that won NPIP from third-party prize schemes is more positive than winning from prize schemes within the firms' supply chain. Due to the indispensable financial rewards accumulated by firms winning NPIPs, the conclusions of this research are very valuable to managers in the allocation of more resources towards augmenting their firms' new product development capabilities.
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