Using Stock Prices to Predict Market Events: Evidence on Sales Takeoff and Long-Term Firm Survival

We evaluate whether stock prices can predict the sales takeoff and the long-term survival of firms at takeoff. We find that abnormal returns are strongly positive in the year prior to takeoff, thus suggesting an important signal of the takeoff. Moreover, we find that negative abnormal returns in the...

Full description

Saved in:
Bibliographic Details
Published in:Marketing science (Providence, R.I.) R.I.), 2008-07, Vol.27 (4), p.717-729
Main Authors: Markovitch, Dmitri G., Golder, Peter N.
Format: Article
Language:English
Subjects:
Abnormal returns
Analysis
Business structures
Decision making
Efficient markets
event study
Financial management
Findings
forecasting
Forecasts and trends
Hypotheses
Hypothesis
Investments
Market exit
Marketing
new product research
Prices
Prices and rates
Product development
Product life cycle
Product management
Production capacity
Public companies
Researchers
Sales forecasting
Sales growth
sales takeoff
Securities markets
Securities sales
stock market forecast
Stock markets
Stock prices
Stock sales
Stocks
Studies
Takeoff
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:We evaluate whether stock prices can predict the sales takeoff and the long-term survival of firms at takeoff. We find that abnormal returns are strongly positive in the year prior to takeoff, thus suggesting an important signal of the takeoff. Moreover, we find that negative abnormal returns in the year of takeoff and one year after takeoff increase the hazard of market exit by 9.5 times relative to firms without these negative abnormal returns. We discuss the implications of these findings for managers and researchers.
ISSN:0732-2399
1526-548X
DOI:10.1287/mksc.1070.0325