International oligopoly and stock market linkages: The case of global airlines

Citation data:

Transportation Research Part E: Logistics and Transportation Review, ISSN: 1366-5545, Vol: 44, Issue: 4, Page: 621-636

Publication Year:
2008
Usage 4150
Abstract Views 4113
Link-outs 37
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Readers 11
Citations 2
Citation Indexes 2
Repository URL:
http://commons.ln.edu.hk/sw_master/1639; https://works.bepress.com/mafirth/34
DOI:
10.1016/j.tre.2007.05.008
Author(s):
GONG, Stephen X. H.; FIRTH, Michael Arthur; CULLINANE, Kevin
Publisher(s):
Elsevier BV
Tags:
Business, Management and Accounting; Social Sciences; Decision Sciences; Information transfer; Airlines; Earnings; Oligopoly; Stock market performance; Event study methodology; Finance
article description
This paper investigates the effect of oligopolistic rivalry on spillovers in financial reporting. Using an event study methodology and focusing on global airlines, we find that firms experience discernable abnormal stock price reactions at the announcement of unexpected earnings by rival airlines. The extent of the price reactions is related to the extent of rivalry between the announcing and non-announcing firms, among other factors. Our empirical evidence, which is inconsistent with the contestable markets hypothesis, confirms an association between the stock market performance of players in a global industry and the extent of inter-firm rivalry in the product market.