Et tu, Brute? Surprising Actions and Their Market Reaction

Authors

  • Jeffrey E. Baker United States Army War College

DOI:

https://doi.org/10.33423/ajm.v19i4.2384

Keywords:

Management, Competitive Dynamics, Surprise, Event Systems Theory, Marketing, Market Reaction

Abstract

We contribute to competitive dynamics research by using an Event System Theory lens to explain how surprising competitive actions explain market value for both the actors and the actee firms. We propose that surprising competitive actions produce a negative impact on a surprised firm while the firm conducting the action receives a positive impact to their abnormal returns. Conducting an event study over a five-year period, we found that the impact of surprising actions is greater than the impact of nonsurprising actions. Our findings also provide justification for firms to invest in competitive intelligence functions for environmental scanning.

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Published

2019-12-04

How to Cite

Baker, J. E. (2019). Et tu, Brute? Surprising Actions and Their Market Reaction. American Journal of Management, 19(4). https://doi.org/10.33423/ajm.v19i4.2384

Issue

Section

Articles