THE EVENT STUDY

The Event Study

The Event Study

Introduction

The stock market is efficient when the competition among different agents (investors) involved in it, guided by the principle of maximum profit, leads to a situation of equilibrium in which at all times the price of any financial asset (actions, obligations, debt securities of the public, etc.) is an estimate unbiased its intrinsic value. We say that a stock market is efficient when the very dynamics of the market that quickly leads to balance the outputs and risks of different titles or portfolios of titles. For a market to be efficient it has to meet three conditions:

That the goods object of exchange is standardized and homogeneous

There are many parties (buyers and sellers)

It is relatively easy to enter and exit the market.

In short, a market is efficient when all relevant information is the extent of the investor is and the price s of the titles reflects this information.

Hypothesis:

H0: There do not appear to be any significant abnormal returns when there is a change in directorate

H1: There does appear to be significant abnormal returns when there is a change in directorate

Event Study

This paper represents an application of the market model and a study of events in order to test the hypothesis of efficient market. The regression is performed on fifty companies from different economic sectors and listed on the NZX 50 Stock market.

The NZX 50, Index comprises of the 50 largest and most liquid companies listed on the NZSE Market. Ranking is by free float market capitalization, index weight by a Modified Free Float methodology, and there are liquidity thresholds to enter and remain in the index. The NZX 50 Index has quarterly reviews and monthly updates. Abnormal returns and cumulative abnormal returns will be analyzed to observe the speed of price adjustment to information disseminated, movement that of a dividend.

Ex Dividend Day

The ex-dividend day is more important to know if you have the right to receive dividends. The following is being ex-dividend day, registration, declaration and payment of dividends and try to clarify some doubts that have arisen in this regard: Ex-dividend day (ex-dividend day) is the day from which the stock is trading without the right to receive the dividend. It is for this reason that the "ex dividend" also called "ex-dividend." If you are buying and holding the shares until that date receive the dividend.

However, if the purchase is made on or after that date will not be entitled to receive the dividend on such shares and who receive the dividend is who they have been sold. Hence, on this day is when the stock dividend and discount its price low for approximately the amount thereof. Closely linked to the ex-dividend day is the date of record (record date) which is the date listed or listed (registered) shareholders entitled to receive the dividend. Care should be taken because if it tends to close the day before the ex dividend to shareholders ratio is not always ...