Stock price reactions to information about top managers

  • Received May 2, 2021;
    Accepted June 14, 2021;
    Published June 21, 2021
  • Author(s)
  • DOI
    http://dx.doi.org/10.21511/bbs.16(2).2021.15
  • Article Info
    Volume 16 2021 , Issue #2, pp. 159-169
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This article uses an event study to investigate the response of a bank’s stock price to information related to these banks’ top managers. In the first event, the Vice Chairman of the founding board of Asia Commercial Bank (ACB) was arrested and the Chief Executive Officer (CEO) of this bank was summoned by the police for questioning. The second event related to the immediate resignation of the Chairman of the Board of Directors of Sacombank (STB) after he received a summons from the investigating police agency. Both of these events happened in Vietnam. The research results showed that unanticipated events (the first event) caused the share prices of both banks to react more strongly, and the impact time was longer than the second event. The first event resulted in the cumulative abnormal returns of ACB and STB being –23.6% and –9.1%. The second event has been found to be directly related to STB, but does not significantly affect this stock, but has a significant effect on the abnormal return of ACB (AR (1) = –4.6%). Asymmetric information, inattention and investor fear of event-related losses may explain this phenomenon.

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    • Figure 1. ACB’s CAR [–10;10] for the first event in 2012
    • Figure 2. ACB’s CAR [–10;10] for the second event in 2012
    • Figure 3. STB’s CAR [–10;10] for the first event in 2012
    • Figure 4. STB’s CAR [–10;10] for the second event in 2012
    • Table 1. Results of abnormal returns and cumulative abnormal returns of ACB
    • Table 2. Results of abnormal returns and cumulative abnormal returns of STB
    • Conceptualization
      Lai Cao Mai Phuong
    • Data curation
      Lai Cao Mai Phuong
    • Formal Analysis
      Lai Cao Mai Phuong
    • Methodology
      Lai Cao Mai Phuong
    • Resources
      Lai Cao Mai Phuong
    • Validation
      Lai Cao Mai Phuong
    • Writing – original draft
      Lai Cao Mai Phuong
    • Writing – review & editing
      Lai Cao Mai Phuong