The Accounting Review Vol. 57 No. 4 1982
Corporate Signaling, Asset Revaluations and the Stock Prices of British Companies.
Abstract
This paper examines the impact on stock price residuals of fixed asset revaluations by 232 listed British companies in the period 1964-1973, primarily using a simple CAPM test. The results show a positive upward movement in the cumulative average residuals around the announcement date. To evaluate their significance, the sample of companies was partitioned into sub-groups dependent on other signals of interest, namely stock dividends and other capitalization changes, and changes in earnings and dividends. From the analysis, it appears that revaluations were associated with unexpected positive returns when taken by the capital market as a pointer to other favorable signals from a company and to increased future benefits to stockholders. Where these expectations of associated or subsequent favorable signals were not confirmed, revaluations alone did not result in significant positive residuals.
- DOI
- 10.2308/tar-4497598
- Volume
- 57
- Issue
- 4
- Pages
- 701-715
- Language
- en
- Sources
- openalex crossref