TY - JOUR
AU - Sandri, Sandro
AB - Based on a study of new investment announcements from 1989 to 1995 by Italian firms listed on the Milan Stock Exchange, we find a positive stock price reaction to new investment decisions. The stock price reaction is larger for joint venture announcements. The market response is also larger for non-state owned companies and when the announcement is released in a period of rising stock prices. The announced investment has no impact on the non-voting shares but increases the voting shares' market price through a significant revaluation of their vote-segment. We find some evidence that new investments lead to management's private benefits rather than towards firm value. This is consistent with the typical Italian corporate governance structure, where a majority shareholder safely controls a listed company while having only a fractional claim on the firm's cash flows.
TI - The Stock Market Reaction to Investment Decisions: Evidence from Italy
JF - Journal of Management & Governance
DO - 10.1023/A:1009945224561
DA - 2004-10-14
UR - https://www.deepdyve.com/lp/springer-journals/the-stock-market-reaction-to-investment-decisions-evidence-from-italy-PhvenBTIVs
SP - 1
EP - 16
VL - 2
IS - 1
DP - DeepDyve
ER -