In the ongoing torrent of press releases, what gets noticed? Company press releases compete for investors’ attention against a wealth of information generated from outside sources. Yet, if investors miss a firm’s positive news, a company’s stock price may end up being undervalued. A study in the Journal of Marketing proposes an easy solution—combine a product announcement with other positive news and issue them on the same day.
Researchers empirically document stock market gains from concurrent releases vis a vis two separate but similar announcements and test the hypotheses on 80,000 corporate announcements made by U.S. publicly traded firms from January 2003 to December 2013. The study confirms that the stock reaction to concurrent announcements is more positive than the aggregate reaction to two similar, but separate, announcements.
The study also identifies the types of firms that would benefit most from this practice: firms that are highly valued, firms with low investor recognition, and firms with high variance in returns preceding the announcements.
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