Akbar, Saeed, Shah, Syed Zulfiqar Ali and Saadi, Issedeeq. (2008) Stock market reaction to capital expenditure announcements by UK firms. Applied Financial Economics, Vol.18 (No.8). pp. 617-627. ISSN 0960-3107

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Abstract

The key objective of this article is to analyse the stock market reaction to capital expenditure announcements by UK firms. To attain such an objective, we adopt an ‘event study’ methodology. We analyse a large sample of 884 capital expenditure announcements made by 426 companies allocated in different sectors over a period of 14 years from 1990 to 2003. The results suggest a significant and positive relationship between capital spending announcements and share prices. Our results also suggest a positive (negative) and significant relationship between announcements of increase (decrease) in capital expenditure and abnormal stock returns. Market participants seem to respond positively to corporate capital expenditure decisions regardless of the types of projects in which the funds are to be invested.

Item Type:	Journal Article
Subjects:	H Social Sciences > HF Commerce
Divisions:	Faculty of Social Sciences > Warwick Business School > Accounting Faculty of Social Sciences > Warwick Business School
Journal or Publication Title:	Applied Financial Economics
Publisher:	Routledge
ISSN:	0960-3107
Date:	2008
Volume:	Vol.18
Number:	No.8
Number of Pages:	11
Page Range:	pp. 617-627
Identification Number:	10.1080/09603100701222234
Status:	Peer Reviewed
Publication Status:	Published
Access rights to Published version:	Restricted or Subscription Access
URI:	http://wrap.warwick.ac.uk/id/eprint/44327

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