The impact of announcements of discovery of new product on stock prices : case for the fast food industry of Canada and the U.S.A.

Abstract

This study examines the impact of new product announcements from 8 fast food companies on share prices. All these announcements were from 2009-2013. Using historical stock price data, an analysis of the existence of abnormal returns was conducted to determine whether or not product announcements impact the stock prices. The results showed that although some companies suffer a negative cumulative abnormal return due to these announcements, there was a positive average cumulative abnormal return in this industry in 2003. Moreover, the means of abnormal returns in the event window (Day-2 to Day+2) imply that sample companies have negative average excess returns during this period, but there seems an significantly increasing trend of excess returns in the following period. The T-test result equally confirms the significance of abnormal returns in this study, meaning that announcements of new food discovery play an indispensable role in the Canada and U.S. fast food market.