Companies’ reactions to negative stock price shocks in the European markets

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Journal Title

Journal ISSN

Volume Title

School of Business | Master's thesis

Authors

Date

2019

Department

Rahoituksen laitos

Major/Subject

Mcode

Degree programme

Finance

Language

en

Pages

47 + 7

Series

Abstract

This study investigates the how public companies in the European setting react to significant negative movements in their stock prices and compare that to results from the US market as done by Seo & Chung (2017). Specifically repurchasing and debt retirement are studied and how their likelihood is impacted by different factors. It is shown that the pronounced share buyback activity seen in the US market following a stock price shock cannot be found in the European context. Evidence is also presented that when facing long-lasting shocks European firms do engage in debt retirement activity. The effects of cash holdings, leverage and companies home country financial market characteristics are studied but evidence is not strong enough to make conclusions.

Description

Thesis advisor

Jylhä, Petri

Keywords

osakehintashokki, pääomarakenne, Eurooppa, lainamarkkinat, velkamarkkinat

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Citation

Permanent link to this item

https://urn.fi/URN:NBN:fi:aalto-201907144323

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[gradu] Kauppakorkeakoulu / BIZ