Tech Stock Valuation

VII. ANNOUNCEMENT EFFECTS AND CONTEMPORANEOUS

ANNOUNCEMENTS

Firms typically make other important corporate announcements at the time good-

will write-offs are made. Thus, it becomes interesting to learn the extent to which

the typically negative stock-price effect associated with goodwill write-offs is

affected by the nature of contemporaneous announcements. To do so, it becomes

interesting to consider the valuation effects of goodwill write-offs for samples of

firms with various types of confounding announcements.

196 CHAPTER 8 GOODWILL WRITE-OFF DECISIONS: DO THEY MATTER?

TABLE 8.2 Cumulative Average Prediction Errors (CAPEs) Over the

(−1,0) Event Period ...