IDEAS home Printed from https://ideas.repec.org/a/spr/reaccs/v3y1998i4d10.1023_a1009644800963.html
   My bibliography  Save this article

Stock Price Behavior Around Announcements of Write-Offs

Author

Listed:
  • Eli Bartov

    (New York University)

  • Frederick W. Lindahl

    (George Washington University)

  • William E. Ricks

    (Rosenberg Institutional Equity Management)

Abstract

Is it plausible that important corporate events such as write-offs, averaging around 20% of firms' market values, are associated with stock-price responses of less than 1%? We investigate this question by observing a lengthy period before and after the announcement date. We find, as suggested by previous studies, that price declines precede write-off announcements. We find what has not been found before: abnormal returns continue to decline after the announcement by as much as 21% annually for a two-year period. This significant stock-price underperformance is also observed around subsequent earnings announcements, and is robust to various risk-adjustment techniques. Our findings are important on two counts: they (1) suggest that disclosure standards may not be sufficient to allow market agents to understand the economic consequences of the write-offs, and (2) reveal a substantial mispricing, which is inconsistent with market efficiency.

Suggested Citation

  • Eli Bartov & Frederick W. Lindahl & William E. Ricks, 1998. "Stock Price Behavior Around Announcements of Write-Offs," Review of Accounting Studies, Springer, vol. 3(4), pages 327-346, December.
    • Handle: RePEc:spr:reaccs:v:3:y:1998:i:4:d:10.1023_a:1009644800963
    DOI: 10.1023/A:1009644800963
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1023/A:1009644800963
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1023/A:1009644800963?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:reaccs:v:3:y:1998:i:4:d:10.1023_a:1009644800963. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.