Preholiday Corporate Announcements and Investor Response

Summary

The document summarizes research on whether investors react differently to corporate announcements made before major holidays. The study examines US stock repurchases, equity issuance, mergers, and quarterly earnings announcements from 1984 to 2012, measuring two-day market-adjusted returns. It reports that reactions before holidays are generally more positive: positive announcements receive stronger responses, while negative announcements receive weaker negative responses. The summary describes panel regressions with firm and market controls, alternative event-window tests, and investor mood measures. It reports a positive preholiday coefficient in the pooled analysis and similar patterns across several event categories.

Key ideas

• The study links preholiday announcement timing with more positive short-window abnormal returns.
• The reported pattern includes stronger reactions to favorable news and milder reactions to unfavorable news.
• The analysis uses two-day market-adjusted returns and controls for firm characteristics, industry, and announcement-specific information.
• Alternative event windows retain a significant preholiday effect in a majority of the reported models.
• The authors connect the result to elevated preholiday sentiment and report a reversal afterward, while the summary does not establish a causal trading strategy.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.