Both, business and academic communities agree that corporate news do affect the company
market value. Empirical data shows that once released in the open, corporate news
often lead to a rather predictable investor reaction.
This investor reaction depends on a great number o factors: whether the news is good
or bad, what type of corporate event has lead to the news, how broad is the analyst
coverage of the company, what were the preceding company and analyst forecasts, prevailing
stock market dynamics at the time, type of company shares, and a dozen of other factors.
In our work, we attempted to put together disjoint empirical data, filter out the
most significant common factors, determine their influence on the company value,
and come up with a coherent big picture. Thereby we have developed a conceptual model
that describes what kind of news and under what conditions will influence the company
stock price this way or the other. We also propose a qualitative methodology for
estimating the influence of news on the stock price. Our model and methodology are
meant to help companies to better anticipate market reaction to their corporate announcements,
and therefore correct possible negative impact leading to overall more efficient
value based management.
Key words: company value, behavioural finance, corporate news, news announcement,