Technology Transactions, Announcement Effect, and Reversal: Dissecting an Anomaly

The Quarterly Review of Economics and Finance, 54 (3): 371-381.

Posted: 26 Feb 2019

See all articles by Abdelaziz Chazi

Abdelaziz Chazi

American University of Sharjah - School of Business & Management

Ashraf Khallaf

American University of Sharjah

Yi (Ian) Liu

University of North Texas

Zaher Zantout

American University of Sharjah

Date Written: Summer 2013

Abstract

We examine the short term stock price performance of firms that acquire or sell technology rights. We find significant positive announcement-period abnormal returns to the acquirers and sellers. However, the price increases reverse during the subsequent twenty trading days. We also find that the reversal is confined to a subsample comprised of stocks that witness pre-announcement price decline. Stocks that witness price run-up prior to the announcement do not reverse to original prices but lose the momentum right after the announcement-period. We believe this is caused by the combination effect of the momentum prior to-and the impact of the announcement.

Keywords: Market Efficiency; R&D Investment; Intellectual Property Rights

JEL Classification: G14; G31; O34

Suggested Citation

Chazi, Abdelaziz and Khallaf, Ashraf and Liu, Yi (Ian) and Zantout, Zaher, Technology Transactions, Announcement Effect, and Reversal: Dissecting an Anomaly (Summer 2013). The Quarterly Review of Economics and Finance, 54 (3): 371-381. , Available at SSRN: https://ssrn.com/abstract=3306140

Abdelaziz Chazi

American University of Sharjah - School of Business & Management ( email )

P.O. Box 26666
Sharjah
United Arab Emirates

Ashraf Khallaf (Contact Author)

American University of Sharjah ( email )

P.O. Box 26666
Sharjah
United Arab Emirates

Yi (Ian) Liu

University of North Texas ( email )

1155 Union Circle #305340
Denton, TX 76203
United States

Zaher Zantout

American University of Sharjah ( email )

P.O. Box 26666
Sharjah
United Arab Emirates

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