MARKET REACTION TO ACCOUNTING PERFORMANCE MEASUREMENT AND COMPANY Prospector Defender: ADDITIONAL EVIDENCE FOR THE PERIOD AFTER THE CRISIS
Erwin Saraswati
SARI ATMINI
Faculty of Economics, University of Brawijaya
ABSTRACT
Miles and Snow’s strategy firm divide into four types, Which are Prospector, defender, analyzer and reaction, with Prospector and defender as the two extremes. The Objectives of this research are to empirically examine the differences in accounting performance Between Prospector and defender firms and the differences in market reaction as well. Measured by performance are accounting earnings before tax, discontinued operations and extraordinary items, sales growth and dividend payout ratio. Market reaction is proxied by actual cumulative abnormal returns. Sample of this research consists of 60 firms, 33 firms are categorized as prospectors and 27 firms are categorized as Defenders. Data of this research are analyzed using Mann-Whitney U test. The results of this research show That there are no differences in earnings before tax, discontinued operations and extraordinary items, sales growth and market reaction Prospector Between firms and defender firms. On the contrary, this research found That dividend payout ratio of defender firms are higher than dividend payout ratio of Prospector firms, as Predicted.
Keywords: Defender, Prospector, financial performance, market reaction
1. Preliminary
Competitive business world is getting more difficult. Each company must be able to compete in order to survive and maintain the continuity of their business. Marketing strategies become very important, in order to survive in the midst of a rigorous business environment. The management company must be able to determine appropriate strategies for each company.
Olson et al. (2005) divides the marketing strategies into four types, namely prospectors, analyzers, low cost and differentiated Defenders Defenders. Miles and Snow (1978) divided the four typology of corporate strategy, the Prospector, defender, analyzer and reaction. Prospector and defender both interpret as an extreme strategy is different. Prospector is a strategy that identifies and develops new products and exploit market opportunities, while the defender is a strategy that tends to maintain the market that has been achieved and a stable product with low price (low leadership cost).
The purpose of this study was to obtain empirical evidence of differences in market reaction to accounting performance measures on two extreme types of marketing strategies, the Prospector and defender. This research refers to research Habbe (2001) that tests on the differences in accounting performance measures for companies that bertipologi Prospector and defender, and is associated with stock price. Habbe (2001) could not find evidence of a link between the stock price with the company strategy Prospector and defender. Therefore, this study wanted to see the consistency of the results of research Habbe (2001) by testing in the period after the crisis.
Original Title
REAKSI PASAR TERHADAP PENGUKURAN KINERJA AKUNTANSI PERUSAHAAN PROSPECTOR DAN DEFENDER: BUKTI TAMBAHAN UNTUK PERIODE SETELAH KRISIS
* Simposium Nasional Akuntansi 10 – Makassar
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