The effect of controlling person's illegalities on stock price returns: Evidence from Elman neural network model.

ABSTRACT: Controlling persons are the ultimate decision-makers of listed companies. Their illegalities have impacts on investors' wealth, firm development, and capital market's quality. Against this backdrop, we provide a quantitative analysis of the short-term stock price reaction to the criminal detention announcements of controlling persons throughout 2007-2019. We applied the Elman neural network (ENN) model into the classical event study methodology and demonstrated that the combination of them helps to improve the estimation accuracy of the stock price reaction. The results show that the stock price has a significant negative reaction to the criminal detention announcements of listed companies' controlling persons on the announcement day, and the average reaction level is -6.67%. Additionally,

SUBMITTER: Xiao M 

PROVIDER: S-EPMC9020737 | biostudies-literature | 2022

REPOSITORIES: biostudies-literature