Do New Product Announcements Have an Impact on Stock Prices of Consumer Electronic Firms?

University essay from Lunds universitet/Nationalekonomiska institutionen

Abstract: This paper examines the stock price impact of new product announcements on the consumer electronic market by conducting event studies. Cumulative average abnormal returns are estimated for event windows of different lengths centered on the new product announcements. Cumulative abnormal idiosyncratic risk is estimated for the same event windows with the intention to research if new product announcements are associated with increased risk. Three out of five event windows are found to have positive cumulative average abnormal returns and all five event windows are found to have an increase in idiosyncratic risk on average. Different trading strategies are presented that can be adopted to exploit the empirical results.

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