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The Market Response to Exploration, Resource and Reserve Announcements by Mining Companies: Australian Data

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Abstract

This paper is the first to conduct an event study on the market response to exploration, resource and reserve announcements made by mining firms. Results from an event study using a matched firm approach that suggest that markets react positively to both the exploration and the resource announcements at the time of their release but find information value in the reserve announcements possibly because all of the information in these announcements have been anticipated by the market. In fact, there is evidence to suggest a high level of anticipation of all three types of announcements which should be a matter of concern for the regulators. The other major surprising finding in the study is that in every instance the market seems to have been overly enthusiastic about the announcements, as share prices turns down almost immediately afterwards and trends downward for an extended time. This leaves open the question as to why does the market get them so horribly wrong.

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  • Ron Bird & Matthew Grosse & Danny Yeung, 2010. "The Market Response to Exploration, Resource and Reserve Announcements by Mining Companies: Australian Data," Working Paper Series 7, The Paul Woolley Centre for Capital Market Dysfunctionality, University of Technology, Sydney.
  • Handle: RePEc:uts:pwcwps:7
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    Cited by:

    1. Jeffrey J. Coulton & Tami Dinh & Andrew B. Jackson & Tom Smith, 2016. "The impact of sentiment on price discovery," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 56(3), pages 669-694, September.
    2. repec:bla:abacus:v:53:y:2017:i:2:p:159-179 is not listed on IDEAS
    3. Gordon, Narelle & Watts, Edward & Wu, Qiongbing, 2014. "Information attributes, information asymmetry and industry sector returns," Pacific-Basin Finance Journal, Elsevier, vol. 26(C), pages 156-175.
    4. Kiran Thapa, 2013. "Stock Message Board Recommendations and Share Trading Activity," PhD Thesis, Finance Discipline Group, UTS Business School, University of Technology, Sydney, number 10.
    5. Kenneth W. Clements & Liang Li, 2014. "Valuing Resource Investments," Economics Discussion / Working Papers 14-27, The University of Western Australia, Department of Economics.
    6. Karen Benson & Peter M Clarkson & Tom Smith & Irene Tutticci, 2015. "A review of accounting research in the Asia Pacific region," Australian Journal of Management, Australian School of Business, vol. 40(1), pages 36-88, February.

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