Tech Stock Valuation

engender the risk of a significant loss in reputational capital stemming from adver-

tising expenditures. In a somewhat puzzling manner, positive and statistically

significant average wealth effects are tied to informal investigation announcements

concerning two security and commodity brokers (2.65%, t = 1.82). Using nonpara-

metric methods, the median wealth effect of 2.65% (z = 1.43) is also significant.

At least in these two instances, investors may have been relieved that more serious

enforcement activity, such as a formal investigation, was not announced.

Table 10.6 also shows that consistently negative average wealth effects associ-

ated with formal ...