Define: Announcement Effect

Announcement Effect
Announcement Effect
What is the dictionary definition of Announcement Effect?
Dictionary Definition of Announcement Effect

Announcement Effect refers to the impact or influence that a public announcement or statement made by a person or organisation has on the behavior, expectations, or perceptions of individuals or entities. This effect is often observed in the financial markets, where the announcement of important news, such as changes in interest rates, corporate earnings, or government policies, can significantly influence the prices of stocks, bonds, currencies, or other financial instruments. The Announcement Effect is based on the idea that the mere act of making an announcement can create a reaction or response from market participants, leading to changes in their investment decisions, market sentiment, or overall economic conditions.

Full Definition Of Announcement Effect

The announcement effect refers to the impact that the release of new information or news has on the price of a security or financial instrument. This effect is often seen in the stock market, where the announcement of positive news, such as strong earnings or a new product launch, can cause the price of a stock to increase, while negative news, such as a lawsuit or regulatory investigation, can cause the price to decrease. The announcement effect is an important consideration for investors and analysts, as it can provide insight into market sentiment and the potential future performance of a security. Additionally, the announcement effect can also have legal implications, as the release of material non-public information can be subject to securities laws and regulations.

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This glossary post was last updated: 29th March 2024.

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