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Part 2: Small Size Investor sentiment and corporate event announcement

, April 30, 2014, 0 Comments

Investor sentiments towards corporate event announcement and the behavior analysis on how they react in the pre and post period of the event.

In the previous article of the series, in this study we concentrated on two different data’s, primary and secondary. Here, evidence showing that primary data’s Figure 1. Occupation of respondents  gathered from small size investors who invested their money in the stocks were salaried and professional employees.

Investor sentiment and corporate event-MarketExpress

From the data are represented graphically as shown in (figure 1), percentage of the current occupation of respondents. Salaried and Professional occupants are the highest with 29%, 19.4% of total respondents have their current occupation as contract workers, 12.9% of the total respondents are wage earners and 9.7% are the lowest with respondents having their own business (self-employed).

Investor sentiment  and corporate event & Size of the investors-MarketExpressFigure: 2 Size of the Investments of respondents

From the data are represented graphically as shown in (figure 2), the percentage of the size of the investments of respondents. 67.7% of the total respondents hold 1 to 500 shares. 19.4% of the total respondents have their investment size of 501 to 1000 shares, 9.7% of the total respondent’s investment sizes are 1001 to 2500 shares and 3.2 % of the total respondents hold the lowest of investment size with 2501 to 5000 shares.

Investor sentiment, corporate event & Size of the investors & Source-MarketExpressFigure 3 Sources of information

Above the graphically represented shown in (figure 3), the percentage sources of information of respondents. 67.7 % of the total respondents source of information is from all of these (newspapers, television and company websites).19.4% of the respondents sources of information are from company’s website, 9.7% of the total respondents have stated that television provided the sources of information and  3.2 % of the total respondents  source of information is from the newspapers.

Investor sentiment, corporate event & Size of the investors & Announcements-MarketExpressFigure 4 which corporate event announcement preferred small size investors.

From the graphically represented as shown in (figure 4 ), the percentage of corporate event announcement of respondents. 29% of the total respondents declare that dividend announcement is the most effective in raising the prices of the shares whereas, 25% of the respondents state that all of the following announcements; bonus, merger, dividend and right issues increase the prices of the shares, 16.1% of the total respondents are most effective in increasing the price of both merger and right issues announcements and 12.9% of the respondents states that bonus announcement were most effective in raising the prices of shares.

Investor sentiment, corporate event & Size of the investors & Influences-MarketExpressFigure 5 which influence on share prices more of respondents

From the graphically represented as shown in (figure 5), which influence on share price more of respondents. 74.2 % of the total respondents state that pre-announcement influences the share prices whereas, 25.8% of the total respondents state that post announcement influences the shares price more.

Investor sentiment, corporate event & Size of the investors & Decisions After-MarketExpressFigure 6 Investor Decision after corporate event announcements

From the represented graphically as shown in (figure 6 ), the investor decision after corporate event announcement of respondents. 64.5% of the total respondents decide on selling the share if, it is positive after announcement. 22.6% of the total respondents were neutral. That is, they do not buy or do not sell the shares after announcement period and 12.9 % of the respondents are ready to purchase the shares if it is negative to the announcement.

Investor sentiment, corporate event & Size of the investors & Impacts-MarketExpressFigure 7 Visibility in share prices to corporate event announcement

From the represented graphically as shown in (figure 7), the percentage of visibility in share prices to corporate event announcement of respondents. 35.5 % of the total respondents argue that the visibility of corporate event announcement will be visible on the share prices for 1 week. 29% of respondent’s states that the visibility of share price would be 2 weeks during corporate announcement period, 16.1 % of the total respondents declares, both 1 to 2 days and more than one month, impacts on visibility of share prices during corporate event announcement and 3.2% of the total respondents argues that the share price may be visible for 1 month during the corporate event announcement.

The analysis shows, only if the share price increases, the investors may be willing to sell the share. On the other hand, if it is negative, the investors may be ready to buy. If there is no reaction in share prices, the investors remains neutral.

Upcoming week will continue the secondary data’s of SRV and CAR values evidence of dividend and share price affects.

Note: Investor response to the previous underprivileged performance of companies announcing share repurchase is ignored in concluding that investor under reaction explains the long-run positive trend in returns.