Dissertations / Theses on the topic 'Profit warning'

The aim of this study is to investigate if individuals reacts rational to the announcement of negative profit warnings in the Swedish stock market. This is done by using an event study approach, investigating the corresponding abnormal returns and cumulative abnormal returns before, during, and after the announcement. Tests is also made to see whether qualitative and quantitative profit warnings and firm size has any impact on the cumulative abnormal returns. The sample consists of 176 profit warnings from 2008 to 2018. On the announcement day, the average abnormal return at day zero was -6.99 % and the average cumulative abnormal returns at day zero and one was -9.06 %. The results found also that smaller firms generate lower abnormal returns on the announcement date, but that there is no difference between qualitative and quantitative profit warnings. With small and insignificant cumulative abnormal returns before and after the announcement, the reached conclusion is that the market is efficient on aggregate level during the event of negative profit warnings.

Den här studien undersöker hur vinstvarningar påverkar stora och små företag. För att förklara dess påverkan på företagen har den effektiva marknadshypotesen och behavioral finance använts som grund. Avgränsningen har gjorts till Stockholmsbörsen då inga tidigare studier haft fokus på den. Empirin visar att företag i Large Cap påverkas med i snitt -4,63% och företagen i Small Cap med -8,42%. Large Cap visade signifikanta abnorma avkastningar under eventdatumet och dagen efter medan Small Cap endast visade signifikans under eventdatumet. Vid en portföljjämförelse mellan de två listorna ligger resultatet i linje med den effektiva marknadsteorin. Däremot vid detaljerade mappningar av företagens aktier kan anomalier hittas som kan förklaras av olika psykologiska fenomen inom behavioral finance.
This paper studies how profit warnings affect largeand small companies. The efficient market hypothesis and behavioral finance was used in orderto explain the affect of the profit warnings on the companies’ stocks. The boundary wasdetermined to be the Stockholm OMX since no previous studies had been performed in this particular fashion. The data demostrates that companies within Large Cap are affected with an average of -4,63% and the companies in Small Cap with -8,42%. Large Cap showed significantabnormal returns during the event date and the day after while Small Cap only showed significance during the event date. A portfolio comparison between the two lists reveals results that are in line with the efficient market hypothesis. However when using detailed data of thecompanies stocks some anomalies can be found, which can be explained by psychological phenomena within behavioral finance.

This thesis examines the initial and long-term market reactions following reversed profit warnings on the Nordic markets. Furthermore, it investigates if firm size and trading volume can explain the magnitude of the market reaction. The study is based on 118 reversed profit warnings announced on the Nordic markets during 2010-2019 applying an event study approach, measuring abnormal returns. To examine if firm size and trading volume affects the market reaction, this study uses a regression analysis to complement the event study. Results show a significant initial market reaction, confirming that the market is genuinely surprised by a profit warning. In accordance with the efficient market hypothesis, the market is also seen to correct its expectations based on the new information. The initial reaction is more substantial for smaller firms and higher trading volume is seen to increase abnormal returns. Our long-term results show a significant reversal in share price, indicating that there is an overreaction to reversed profit warnings. The long-term regression results show that neither firm size nor trading volume explain the reversal in share price.

Background:

Studying insider trading is difficult due to its sensitive and delicate nature. Therefore it is hard to gauge the extent of such activities. This problem has resulted in a fierce debate whether it should be prohibited or not. Using a method where the effect on monopolistic information usage can be isolated insider trading can be monitored. Such an event is a profit warning.

Purpose:

This paper examines whether insider trading exist for companies

making a profit warning between year 2003 and 2007 on the Stockholm

Stock Exchange. Furthermore the aim with the study is to contribute

to the debate on the insider trading legislation.

Method:

The study’s purpose is achieved through an event study studying the

cumulative abnormal return as well as average daily returns during

the thirty days preceding the warning for a sample of thirty companies.

Since profit warnings should be completely random and as such

almost impossible for the market to know in advance, a significant

abnormal return can only be explained with insider trading. The abnormal returns were calculated using the Capital Asset Pricing Model

since it is the most widely used model.

Conclusion:

For the chosen time frame, when testing on a 95% significance level,

the study found a significant abnormal return during the last 10 days

of the event window but not for the entire period of thirty days. The

daily average return for the thirty companies were significant for six

of the thirty days within the event window. Two of them were included

in the last ten day period with a confirmed significant abnormal

return which might suggest that on average insider trading tend

to occur during these days. The other four was discarded due to

sample issues. Since the study was limited to a period of four years

extending the results to a period other than tested should be made

with great care since conditions may differ over time. Concerning the

current debate on the insider legislation, the findings can be used by

both sides. Either to argue for a strengthening of the law or to question its existence.

This thesis consists of three related essays that examine the role of information in the market for corporate debt. The three essays collectively examine the role of information produced by the firm and its agents on alleviating information asymmetries facing public debtholders. In particular, the thesis examines the impact of bondholders' demand for reputation and information on the firm's disclosure choices and accounting attributes; and the impact of information produced by monitoring the firm's private debt before its entry to the public debt market on the yield spread of its initial bond. The first essay investigates the influence of public corporate debt on the willingness of UK firms to issue profit warnings. UK firms operate within a legal environment that is less litigious compared to their US counterparts. This setting allows for motives other than fear of litigation to affect UK companies' decision to warn. The results of this essay indicate that UK firms with public debt are more forthcoming with the disclosure of permanent negative news. Also, the results show that UK firms without public debt are more likely to hide bad news when they are closer to financial distress. However, for firms with public debt, the results indicate that the effect of closeness to financial distress on the willingness to warn is attenuated. These findings suggest that firms with public debt are deterred from hiding negative news for fear of damaging their reputation for truthful and timely disclosure. Public debt appears to act as a disciplinary mechanism on corporate disclosure policy.The second essay examines the impact of the initial public debt offering (IPDO) on the timeliness properties of the firm's accounting income. Firms are more likely to communicate with private lenders on a private, insider-basis, while they are more likely to communicate with bondholders using public information. Therefore, bondholders, compared to private lenders, are expected to be more sensitive to the quality of public information. The results indicate that firms adopt a timelier policy of economic loss recognition after their initial public debt offering using Basu's (1997) time series measure of timely loss recognition. These findings suggest that firms face higher demand for public information from a large number of external and dispersed bondholders.The third essay investigates the impact of information associated with prior private debt financing on the yield spread of companies' initial public debt offerings. Specifically, this essay focuses on information produced through monitoring by credit rating agencies and monitoring by banks. The findings indicate that IPDOs with the same or upgraded credit ratings enjoy significantly lower yield spreads. This finding suggests that changes in credit ratings could convey new information to investors regarding the firm's commitment to maintain a high credit quality. In addition, the findings of this essay indicate that strong banking relationships significantly reduce yield spreads for initial public debt offerings. This suggests that a strong banking relationship conveys a positive signal to bondholders regarding the bank's assessment of the quality of the firm.

Connus sous le nom de Systèmes d’Alerte Avancés, ou Early Warning Systems (EWS), les modèles de prévision des crises financières sont appelés à jouer un rôle déterminant dans l’orientation des politiques économiques tant au niveau microéconomique qu’au niveau macroéconomique et international. Or,dans le sillage de la crise financière mondiale, des questions majeures se posent sur leur réelle capacité prédictive. Deux principales problématiques émergent dans le cadre de cette littérature : comment évaluer les capacités prédictives des EWS et comment les améliorer ?Cette thèse d’économétrie appliquée vise à proposer (i) une méthode d’évaluation systématique des capacités prédictives des EWS et (ii) de nouvelles spécifications d’EWS visant à améliorer leurs performances. Ce travail comporte quatre chapitres. Le premier propose un test original d’évaluation des prévisions par intervalles de confiance fondé sur l’hypothèse de distribution binomiale du processus de violations. Le deuxième chapitre propose une stratégie d’évaluation économétrique des capacités prédictives des EWS. Nous montrons que cette évaluation doit être fondée sur la détermination d’un seuil optimal sur les probabilités prévues d’apparition des crises ainsi que sur la comparaison des modèles.Le troisième chapitre révèle que la dynamique des crises (la persistance) est un élément essentiel de la spécification économétrique des EWS. Les résultats montrent en particulier que les modèles de type logit dynamiques présentent de bien meilleurs capacités prédictives que les modèles statiques et que les modèles de type Markoviens. Enfin, dans le quatrième chapitre nous proposons un modèle original de type probit dynamique multivarié qui permet d’analyser les schémas de causalité intervenant entre différents types crises (bancaires, de change et de dette). L’illustration empirique montre clairement que le passage à une modélisation trivariée améliore sensiblement les prévisions pour les pays qui connaissent les trois types de crises
Known as Early Warning Systems (EWS), financial crises forecasting models play a key role in definingeconomic policies at microeconomic, macroeconomic and international level. However, in the wake ofthe global financial crisis, numerous questions with respect to their forecasting abilities have been raised,as very few signals were drawn prior to the starting of the turmoil. Two questions arise in this context:how to evaluate EWS forecasting abilities and how to improve them?The broad goal of this applied econometrics dissertation is hence (i) to propose a systematic model-free evaluation methodology for the forecasting abilities of EWS as well as (ii) to introduce new EWSspecifications with improved out-of-sample performance. This work has been concretized in four chapters.The first chapter introduces a new approach to evaluate interval forecasts which relies on the binomialdistributional assumption of the violations series. The second chapter proposes an econometric evaluationmethodology of the forecasting abilities of an EWS. We show that adequate evaluation must take intoaccount the cut-off both in the optimal crisis forecast step and in the model comparison step. The thirdchapter points out that crisis dynamics (persistence) is essential for the econometric specification of anEWS. Indeed, dynamic logit models lead to better out-of-sample forecasting probabilities than those oftheir main competitors (static model and Markov-switching one). Finally, a multivariate dynamic probitEWS is proposed in the fourth chapter to take into account the causality between different types of crises(banking, currency, sovereign debt). The empirical application shows that the trivariate model improvesforecasts for countries that underwent the three types of crises

Responsabilité du fait du produit c’est le nom, donné à un domaine de droit concernant la responsabilité des personnes qui s’occupent à fabriquer et vendre ou distribuer par d’autres moyens des produits pour les différents sorts des dommages causés aux consommateurs et même aux tierces personnes par les défauts de sécurité de ces produits. Cette responsabilité est une responsabilité sans faute qui va au-delà distinction traditionnelle entre la responsabilité contractuelle ou extra-contractuelle. Il existe différents modèles de la responsabilité du fait des produits défectueux dans le monde. Parmi eux le droit américain et le droit européen de la responsabilité du fait des produits sont particulièrement significatifs. Aux Etats-Unis la section 402A de la seconde restatement of torts déterminait le régime de la responsabilité du fait des produits. En 1998 l’institut de droit américain a publié la troisième restatement of torts sous le nom de la responsabilité du fait des produits, ce qui est censé de remplacer la section 402A de la seconde restatement of torts. En Europe, la directive communautaire numéro (85/374/CEE) du conseil du 25 juillet 1985 relative au rapprochement des dispositions législatives, réglementaires et administratives des États membres en matière de responsabilité du fait des produits défectueux constitue le droit spécial des états membres en matière de la responsabilité du fait des produits défectueux. Cette directive a été transposée en droit français par la loi du 19 mai 1998 sous la forme des articles 1386-1 à 1386-18 du code civil français. La faute constitue la seule base légale de la responsabilité civile des vendeurs et des fabricants des produits défectueux en droit iranien. Pour résoudre les conflits de lois et des juridictions qui résultent de l’exportation de produits au niveau international on peut mettre œuvre les conventions et les règlements internationales qui ont été élaborées en la matière ainsi que le droit commun des conflits des lois et des juridictions des pays
Products liability is the name of a field of law concerning the liability of persons who are engaged in the business of selling or otherwise distributing products who sell or distribute a defective product for harm to persons or property caused by the defect. They are strictly liable. Their liability is a kind of liability which goes beyond the traditional distinction between the contractual and tortious liability. The United-States of America and European Union have the most developed products liability laws in the world. In the United-States the American Law Institute memorialized precedential rule of strict products liability in tort in §402A of the Second Restatement of Torts, and officially promulgated it in 1965. In 1992, the American Law Institute began working on a new Restatement (Third) of Torts on the specific topic of products liability law, approving the new Restatement in 1997 and publishing it in 1998 as The Restatement (Third) of Torts: Products Liability. In Europe, Council Directive of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products (85/374/EEC) constitutes specific law of products liability of European Union member states. This directive has been transposed in French law by 19 May 1998 act and formed articles 1386-1 to 1386-18 of civil code. Fault is the only legal basis of Iranian products liability law. For solving conflicts of laws and jurisdictions which arise from international trade of products and determining the applicable law and competent jurisdiction we can implement international conventions and regulations which have been elaborated on this subject as well as traditional rules of conflicts of laws and jurisdictions of the countries

Banking crises have afflicted economies in developing countries at least as much as they have in developed ones. In this paper, we discuss possible indicators that allow an effective forecast of banking crises based on an historical analysis of past crises, and develop several probit models, using yearly data from 1960 to 2014 for 33 developing countries across Latin America, Africa and Asia-Pacific. We find that a dynamic probit model which incorporates exuberance dummy variables gives the best forecasting results. Data on exports, inflation, broad money and birth rate provide the best indicators across the different models tested.

In the aftermath of the verdict of acquittal in “Sweden’s largest insider trading case” once again a debate concerning illegal insider trading has arisen and a lot of criticism is directed towards the laws. The purpose of this master´s thesis is to investigate the occurrence of insider trading and whether or not Swedish legislation has decreased the presence of insider trading on the Stockholm Stock Exchange. For this purpose the legal aspects and relevant arguments are presented and discussed. An event study is performed in order to see if profit warnings show evidence of insider trading on the Swedish stock exchange. The event study show statistically significant evidence of illegal insider trading in 21 out of 44 cases on the Stockholm stock exchange. There is no significant difference in insider trading between profit warnings and reversed profit warnings. The regression show evidence of that the law has had a small negative impact on insider trading in the sample which is surprising and that insider trading is industry correlated. The high frequency of insider trading shows evidence of that the laws are inefficient in stopping insider trading. Since it is clear that the law is seriously flawed in stopping insider trading and that insider trading actually may positively affect the market and its participants, it is argued that it is very questionable if the legislation is necessary and if insider trading should be prohibited at all.

Banking crises, albeit rare, can have nefarious consequences. As such, it is relevant to understand not only what factors cause these crises, but what variables can be used in their early detection. Economic integration still requires country speci cities to be considered in macro-prudential monitoring. This project explores the dynamics of banking crises, the role of economic and stock market growth as warning variables for several European regions. Dynamic probit models are used in a panel dataset. Results show that real GDP, stock market growth and house price growth are good indicators of crisis, and separate models for regions within the Eurozone predict crisis more accurately.