The effect of the imposition of a public reprimand on the stock price of companies in Malaysia
ISSN: 1359-0790
Article publication date: 14 June 2021
Issue publication date: 28 September 2021
Abstract
Purpose
This paper aims to examine the effect of the imposition of public reprimands on the underlying stock prices of companies in Malaysia.
Design/methodology/approach
Data on 148 companies that received public reprimands during the period from 2007 to 2013 were collected from the Bursa Malaysia website to analyse the market reactions to the imposition of public reprimands.
Findings
Based on a market model of abnormal returns, the empirical result showed that the imposition of a public reprimand had a negative impact on a company’s stock price. Moreover, when a market model of average abnormal returns (AAR) was used, the result indicated that companies that had received a public reprimand had a negative AAR value.
Research limitations/implications
The findings from this study have implications for shareholders in making their investment decisions because they can switch their investments to other companies and markets after a company in which they are interested or have made an investment has received a public reprimand.
Originality/value
There is limited research on the imposition of public reprimands and the effect that it has on companies in developing countries. Hence, this study contributes to research in this area by providing evidence on the effect of public reprimand on stock price reactions in the context of a developing country, namely, Malaysia.
Keywords
Acknowledgements
The study is supported by the Fundamental Research Grant Scheme (FRGS/2/2013/SS05/UMT/02/2) provided by the Ministry of Higher Education of Malaysia. The authors would like to thank the Ministry for its support.
Citation
Zainudin, E.F., Hashim, H.A. and Ismail, S. (2021), "The effect of the imposition of a public reprimand on the stock price of companies in Malaysia", Journal of Financial Crime, Vol. 28 No. 4, pp. 1232-1243. https://doi.org/10.1108/JFC-11-2020-0233
Publisher
:Emerald Publishing Limited
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