Capital Market Responses to the Nationalization Announcement by the Government of the Bolivarian Republic of Venezuela
Borin, Laura (2007) Capital Market Responses to the Nationalization Announcement by the Government of the Bolivarian Republic of Venezuela. [Dissertation (University of Nottingham only)] (Unpublished)
The event study methodology is used to asses the effects of nationalization on the Venezuelan capital markets and on the two companies being nationalized, CANTV and ENELVEN. Using information form the Caracas Stock Exchange, we examined the Venezuelan capital marketÃ�Â¢Ã�Â�Ã�Â�s response to a particular announcement event given by the countryÃ�Â¢Ã�Â�Ã�Â�s government. Evidence suggests that Venezuelan capital markets are extremely rigid to this process. The analysis uncovers evidence of statistically significance negative stock price reaction which corresponds to lose in both firms market capitalization. Most interestingly, we found that volatility doubled since the announcement took place. We discuss the implications of these findings for existing research on political uncertainty, market efficiency and investorÃ�Â¢Ã�Â�Ã�Â�s overreaction.
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