||The impact of new route announcements on the market value of airline
||Institute of International Business
new product announcement
Previous event studies show mixed results about the announcement effect of new product introductions on firms’ market value. Because prior researches focus on either cross industries sample or single manufacturing industries, we thereof hope to clarify that ambiguity by studying this effect in the context of a service industry. This study empirically estimates the impact of new route announcements on the market value of airline companies. Using the sample of U.S. airlines over a 10 year period, we further identify factors that influence the direction and magnitude of the change in market value. To provide more insights, we also examine if those influences vary across different groups of announcements. Our work extends the body of literature about the impact of new product announcements and the literature about new entry effects in airline industry. Moreover, these findings will provide insights to managers and investors in evaluating new route opening decision.
Table of Contents
Table of contents ii
List of Tables iii
Chapter 1: Introduction 1
Chapter 2: Literature review 4
1. New product introductions 4
2. Airline industry 6
3. Hypotheses 9
Chapter 3: Methodology 15
1. Event study methodology 15
2. Data collection 17
3. Regression analysis 18
Chapter 4: Empirical results 22
1. Sample statistics 22
2. Abnormal returns for new route announcements 24
3. Abnormal returns for hypotheses tests 25
4. Regression analysis 28
Chapter 5: Conclusions 33
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