Proceedings of 10th Annual London Business Research Conference
10 - 11 August 2015, Imperial College, London, UK, ISBN: 978-1-922069-81-8
The Market Reaction to Diversification Investment
Announcements: Evidence from Associated British Food
Chen, Yen-Lin* and Lin and Yi-Hua**
Since that more and more companies focus on diversification investment, the purpose of
this study is to analyze the capital market reaction to Associated British Food plc’s
announcements by utilizing the Market Modal. The study period is from 06-March-2012 to
06-March-2015, and then divided into the estimation periods and the test period. The four
firm-oriented events, included earning-related and investment announcements, are chosen
to investigate the impacts on the share prices during the test period. The results suggest
that the capital market reaction to the investment announcements was normally efficient,
since the positive abnormal returns significantly happened within the three days (-1, 1),
which similar results with the prior studies. Accordingly, an investment increase should be
perceived by investors as a good signal.
JEL Codes:
F21, G14 and G31
*Yen-Lin Chen, MBA student, Department of Accounting Information, Southern Taiwan University of
Science and Technology.
**Yi-Hua Lin: Assistant Professor, Department of Accounting Information, Southern Taiwan University of
Science and Technology, No.1, Nantai St, Yung-Kang City, Tainan 710, Taiwan (R.O.C.), Email:
a974gtl@mail.stust.edu.tw,