Analysis of the impact of relevant facts on the return of higher education company shares

Abstract

The research proposes to analyze the impact of relevant facts of the last two years on the share prices of Kroton Educacional S.A., a company in the higher education sector. Investors' reactions to information that normally alter managerial decisions of institutions can influence share returns. The research will bring to light how the company's performance in the face of several relevant facts and that may have impacted the accounting and financial results of the company. In addition, it will verify if the merger strategy was an effective management action to keep the business attractive and profitable in the face of the crisis experienced by the country. An empirical-analytical, exploratory, quantitative-based and case-study research is used to evaluate whether the prices and stock returns were changed after the following disclosures: (i) result of the year 2015 amid the economic crisis; (ii) alteration of the rules for granting the Financing Fund for Higher Education Students; and (iii) purchases and mergers of companies in this sector and the publication of a magazine criticizing the Financing Fund for Higher Education Students. The event window used was 4 days before (D-4) until 4 days later (D + 4) around the event date (D0), with a 40-day estimation window (D-5 to D-44 ). The least squares method was used to calculate the beta and the abnormal returns and accumulated abnormal returns were estimated. The abnormal return was calculated from the market model. A p-value of less than 5% was obtained, which demonstrates the form of semiforteed market efficiency in the results, since stock prices were impacted, but soon after they returned to their normal level, since the market had absorbed the information.