Title: Spin-off and market reaction: what is The Wall Street Journal role?

Authors: Elvira Anna Graziano

Addresses: Link Campus University, Via Nomentana, 335 00162 Rome, Italy

Abstract: Building on the pioneering study by Covey (1999), this paper addresses a central question: according to the iceberg model of system thinking, can media play a relevant role in the financial market structure and hence influence the behaviour of investors? This study identifies specialised press as a key-player in the financial market. Through analysis with an event study approach, the effect of publication of spin-off news in The Wall Street Journal (WSJ) between 2000 and 2013 on the abnormal returns of 179 listed companies has produced the following results: 1) top newspapers seem to affect stock prices while not providing any new information, when publication follows the announcement; 2) top newspapers have a significant impact on the behaviour of investors, when the publication of news precedes the spin-off announcement.

Keywords: restructuring; spin-offs; media; business systems; event study; systems thinking; market reaction; financial market structure; investor behaviour; abnormal returns; newspapers; stock prices; financial markets; stock markets.

DOI: 10.1504/IJMABS.2016.080230

International Journal of Markets and Business Systems, 2016 Vol.2 No.2, pp.157 - 170

Received: 21 Jan 2016
Accepted: 31 May 2016
Published online: 08 Nov 2016 *

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