On 24 January 2022 ABC Ltd announced that its EPS for the year ended 31 December...

  

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On 24 January 2022 ABC Ltd announced that its EPS for the year ended 31 December 2021 was $0.45. This was 40% lower than the previous year. On the day of the announcement the share price of ABC increased resulting in a postive abnormal return for shareholders on that day of 8.45%. No other abnormal returns were generated around that date and the overall market was down slightly on the day of the announcement. What does this outcome imply? Is this result consistent with market efficiency? Discuss. On 24 January 2022 ABC Ltd announced that its EPS for the year ended 31 December 2021 was $0.45. This was 40% lower than the previous year. On the day of the announcement the share price of ABC increased resulting in a postive abnormal return for shareholders on that day of 8.45%. No other abnormal returns were generated around that date and the overall market was down slightly on the day of the announcement. What does this outcome imply? Is this result consistent with market efficiency? Discuss.

Answer rating: 100% (QA)

This outcome implies that investors reacted positively to the announcement of ABC Ltd despite the de... View the full answer