Abstract
This study investigates the long-term stock market performance of firms following announcements of new product introductions (NPIs). We find that firms announcing NPIs experience significantly positive abnormal stock returns in the three- and five-year post-announcement periods. Further, firms’ marketing capabilities and industry background, firm size, and the timing new products are introduced significantly affect shareholder gains from NPIs. The Carhart four-factor model, the zero-investment portfolio method, and the buy-and-hold return procedure yield consistent results. Our findings show that investors on average do not fully capture the valuation impact of new products nor incorporate the information contained in the initial announcements.
| Original language | English |
|---|---|
| Pages (from-to) | 162-169 |
| Number of pages | 8 |
| Journal | Finance Research Letters |
| Volume | 20 |
| DOIs | |
| Publication status | Published - 2017 Feb 1 |
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All Science Journal Classification (ASJC) codes
- Finance
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The long-term performance of new product introductions. / Chen, Li Yu; Lai, Jung Ho; Chang, Shao-Chi.
In: Finance Research Letters, Vol. 20, 01.02.2017, p. 162-169.Research output: Contribution to journal › Article
TY - JOUR
T1 - The long-term performance of new product introductions
AU - Chen, Li Yu
AU - Lai, Jung Ho
AU - Chang, Shao-Chi
PY - 2017/2/1
Y1 - 2017/2/1
N2 - This study investigates the long-term stock market performance of firms following announcements of new product introductions (NPIs). We find that firms announcing NPIs experience significantly positive abnormal stock returns in the three- and five-year post-announcement periods. Further, firms’ marketing capabilities and industry background, firm size, and the timing new products are introduced significantly affect shareholder gains from NPIs. The Carhart four-factor model, the zero-investment portfolio method, and the buy-and-hold return procedure yield consistent results. Our findings show that investors on average do not fully capture the valuation impact of new products nor incorporate the information contained in the initial announcements.
AB - This study investigates the long-term stock market performance of firms following announcements of new product introductions (NPIs). We find that firms announcing NPIs experience significantly positive abnormal stock returns in the three- and five-year post-announcement periods. Further, firms’ marketing capabilities and industry background, firm size, and the timing new products are introduced significantly affect shareholder gains from NPIs. The Carhart four-factor model, the zero-investment portfolio method, and the buy-and-hold return procedure yield consistent results. Our findings show that investors on average do not fully capture the valuation impact of new products nor incorporate the information contained in the initial announcements.
UR - http://www.scopus.com/inward/record.url?scp=84995666039&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84995666039&partnerID=8YFLogxK
U2 - 10.1016/j.frl.2016.09.022
DO - 10.1016/j.frl.2016.09.022
M3 - Article
AN - SCOPUS:84995666039
VL - 20
SP - 162
EP - 169
JO - Finance Research Letters
JF - Finance Research Letters
SN - 1544-6123
ER -