Toshiba’s market valuation in the midst of a long term turmoil

Authors

  • Serge Rey University of Pau, Cedex
  • Sophie Nivoix University of Poitiers, Poitiers

DOI:

https://doi.org/10.14666/2194-7759-8-2-004

Keywords:

Toshiba, Japan, abnormal return, risk, auditing, scandal

Abstract

Since 2008 Toshiba is experiencing a major fraud and financial scandal, which has impaired its stock price, governance and reputation. As this conglomerate is one of the largest and more ancient Japanese industrial group, it is highly interesting to analyze the impact of this situation on the main financial indicators of the company in a long run perspective. Our study underlines that while the risk level of the firm was increasing the returns and stock price were dropping. Such an evolution really endangered the group, as showed by the stock market ratios. In addition, the calculation of abnormal returns confirms that the news considered a priori as good (or bad) generated cumulative increases (or decreases) in the returns of the Toshiba stock.

Downloads

Download data is not yet available.

References

Alexander C, Lazar E, Stanescu S (2013), Forecasting VaR using analytic higher moments for GARCH processes, International Review of Financial Analysis, 30: 36-45.

Conrad J, Cornell B, Landsman W (2002), When Is Bad News Really Bad News? The Journal of Finance, 17(6): 2507-2532.

Fama EF (1998), Market Efficiency, Long-Term Returns, and Behavioral Finance, Journal of financial economics, 49: 283-306.

Fama EF, Fisher L, Jensen MC and Roll R (1969), The Adjustment of Stock Prices to New Information, International Economic Review, 10(1): 1-21.

Fama EF, French KR (1988) Dividend Yields and Expected Stock Returns, Journal of Financial Economics, 22(1): 3-25.

Jaussaud J, Nivoix S, Rey S (2015), The Great East Japan Earthquake and stock price”, Economic Bulletin, 35(2): 1237-1261.

Investigation report, Independent Investigation Committee for Toshiba Corporation, 20 July 2015.

Laakkonen H, Lanne M (2009) Asymmetric News Effects on Exchange Rate Volatility: Good vs. Bad News in Good vs. Bad Times, Studies in Nonlinear Dynamics & Econometrics, 14(1): 1-38

Lundblad H, Berger Davidson N (2003,) Enron/Off: A Morality Play in Three Acts, International Business & Economics Research Journal, 2(3): 105-119.

MacKinlay AC (1997), The Event Studies in Economics and Finance, Journal of Economic Literature, 35: 13-39.

Narayan PK, Liu R (2018), A new GARCH model with higher moments for stock return predictability, Journal of International Financial Markets, Institutions and Money, 56: 93-103

OECD (2017), Japan – Economic forecast, June 2017

Rahman KM, Bremer M (2016), Accounting irregularities at Toshiba: An Inquiry into the Nature and Causes of the Problem and its Impact on Corporate Governance in Japan, Global Advanced Research Journal of Management and Business Studies, 5(4): 88-101.

Rey S, Nivoix S (2018), Dynamics of Tokyo Electric Power Company and the Nikkei: 1985 to 2016 including the Fukushima disaster, Journal of Economic Integration 33(1): 979-1010. DOI: https://doi.org/10.11130/jei.2018.33.1.979

Ross SA (1977), The Determination of Financial Structure: The Incentive-Signalling Approach, The Bell Journal of Economics, 8(1): 23-40.

Sharpe, W.F. (1964), “Capital Asset Prices: a theory of equilibrium under conditions of risk”, Journal of Finance, 19(3): 425-442.

Ziobrowski, A.J., Cheng, P., Boyd, J.W. and B.J. Ziobrowski (2004), “Abnormal Returns from the Common Stock Investments of the U.S. Senate”, Journal of financial and quantitative analysis, 39(4): 661-676

Zulauf L, Grierson P (2002), Enron: The Good, The Bad, The Lessons, International Business & Economics Research Journal, 1(11): 49-67.

Published

2020-03-14

How to Cite

Rey, S., & Nivoix, S. (2020). Toshiba’s market valuation in the midst of a long term turmoil. Journal Global Policy and Governance, 8(2), 71-94. https://doi.org/10.14666/2194-7759-8-2-004