Institutional reorganization plan announced by Banco do Brasil: an empirical study on reaction of the bank stock
DOI:
https://doi.org/10.5007/2175-8069.2020v17n42p70Abstract
This study examined the impact of the announcement made by Banco do Brasil on the price of the bank's stocks. The assets that comprise the study sample are Banco do Brasil Stock Price on B3 (Brasil, Bolsa, Balcão) and ADRs (American Deposit Receipts) on Nyse (New York Security Exchange). Additionally, the shares of financial institutions listed in Brazil are considered according to the Peer Review criterion, totaling 15 assets studied. Event Studies were conducted for each of the selected assets and robustness tests were added. Positive Abnormal Returns were found on the day of the event. This study demonstrated that the announcement of the measures taken by the institution brought favorable effects to the valuation of the stocks, conducting a positive surprise to the announcement. It is argued that, although such measures were already awaited, the stock price reflexes were important enough for investors to observe the decisions taken as appropriate to bring the institution's profitability back to higher levels in the future.
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