Enhancing Stock Market Return with New Product Preannouncements: The Role of Information Quality and Innovativeness

Abstract

To advance development and application of signaling theory in the new product preannouncement literature while seeking to resolve ambiguity regarding the influence of innovativeness on stock market return, the role of information quality is examined. Specifically, this study investigates the effect of innovativeness across low and high levels of information quality. The results, ascertained using event study methodology on a sample of 243 new product preannouncements collected over a nine-year period, indicate that higher information quality increases the strength of the positive relationship between innovativeness and stock market return. The findings offer managers insight into what role information quality plays in new product preannouncements that can help their firms generate higher stock market return. Practitioner Points• Information quality, composed of three dimensionstrustworthiness, verifiability, and consistency-affects stock market returns on new product preannouncements. • When new products are preannounced with high information quality, product innovativeness is positively associated with stock market return. When new products are preannounced with low information quality, there is no effect of product innovativeness on stock market return. • When preannouncing highly innovative new products, firms seeking to maximize short-term stock market return should preannounce using high information quality if they intend and are able to develop and commercialize the product. • When preannouncing low innovative products, there is no effect on stock market return regardless of whether preannouncement information quality is low or high.

Improving information quality of Wikipedia articles with cooperative principle

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Information Quality in Latin American Digital Native Media: Analysis Based on Structured Dimensions and Indicators

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