When 1 +1 > 2: How investors react to new product releases announced concurrently with other corporate news

Nooshin L. Warren, Alina Sorescu

Research output: Contribution to journalArticlepeer-review

18 Scopus citations

Abstract

Firms routinely use press releases to announce the launch of their new products. An examination of these press releases shows that in approximately 7% of cases, firms issue new product announcements concurrently with other corporate announcements. However, the consequences of these actions are unknown because event studies typically eliminate concurrent announcements in an attempt to avoid their confounding effects. The authors use a comprehensive sample of press releases issued by publicly traded U.S. firms to document the consequences of firms announcing the release of a new product concurrently with another corporate announcement that conveys good news. Drawing on Merton's (1987) model of capital market equilibrium with incomplete information, the authors identify three conditions that are conducive to the issuance of concurrent new product announcements. They then verify that under these conditions, the increase in shareholder value associated with concurrent announcements is higher than that associated with issuing two similar announcements separately. This research provides insights into how firms can leverage corporate communications to increase stock prices.

Original languageEnglish (US)
Pages (from-to)64-82
Number of pages19
JournalJournal of marketing
Volume81
Issue number2
DOIs
StatePublished - Mar 2017
Externally publishedYes

Keywords

  • Corporate communications
  • Event study
  • Investor recognition
  • New product announcements
  • Propensity score matching

ASJC Scopus subject areas

  • Business and International Management
  • Marketing

Fingerprint

Dive into the research topics of 'When 1 +1 > 2: How investors react to new product releases announced concurrently with other corporate news'. Together they form a unique fingerprint.

Cite this