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The Designation and Removal of Trustee Stock Status: Wealth Effects
Author(s) -
Ding David K.,
Low Angie
Publication year - 2004
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/j.0306-686x.2004.00548.x
Subject(s) - shareholder , wealth effect , stock (firearms) , event study , business , monetary economics , phenomenon , economics , financial economics , accounting , finance , corporate governance , biology , geography , monetary policy , paleontology , context (archaeology) , physics , archaeology , quantum mechanics
This study investigates the impact of trustee stock status announcements on shareholders’ wealth in Singapore. An event study methodology is used to ascertain the abnormal returns around the announcement day. The results show that there is a positive and permanent wealth effect on trustee stocks resulting from designation announcements. Conversely, when trustee stocks lose their status, the significant negative abnormal returns suggest that shareholders’ wealth is adversely affected. This reaction, however, appears to be a temporary phenomenon and is not simply a mirror image of designation announcements. The differences in the underlying regulatory structures partially explain the findings.