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Stock price reaction to an arrangement approval in restructuring proceedings – the case of Poland

Author

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  • Prusak Błażej

    (Faculty of Management and Economics, Gdańsk University of Technology, Gdańsk, Poland .)

  • Potrykus Marcin

    (Faculty of Management and Economics, Gdańsk University of Technology, Gdańsk, Poland .)

Abstract

The study aims to empirically analyze the reaction of stock prices to the information about the conclusion and acceptance of a debtor–creditor arrangement under restructuring proceedings of companies listed on the stock exchange in Poland. The following main research hypothesis was verified: public disclosure of information about an arrangement conclusion and acceptance in restructuring proceedings results in above-average rates of return due to investments in the stocks of these entities in the short term. Three events were assessed: the public disclosure of information about the conclusion of a debtor–creditor arrangement (Event 1), its approval by a court (Event 2), and the decision becoming final (Event 3). The research method applied was the event study. Event 1 and Event 3 leads to an above-average and statistically significant increase in stock prices on the day of the event. In contrast, no statistically significant above-average rates of return accompanied Event 2.

Suggested Citation

  • Prusak Błażej & Potrykus Marcin, 2022. "Stock price reaction to an arrangement approval in restructuring proceedings – the case of Poland," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 58(3), pages 279-298, September.
    • Handle: RePEc:vrs:ijomae:v:58:y:2022:i:3:p:279-298:n:8
    DOI: 10.2478/ijme-2022-0014
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    More about this item

    Keywords

    event analysis; market efficiency; price reaction; restructuring proceedings;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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