This study employs a rigorous research methodology,
including event study methodology and multiple regression analysis. We examined
domestic listed and OTC companies from January 1, 2011, to December 31, 2023.
The event study methodology allowed us to analyze the impact of capital
reduction announcements on stock prices. At the same time, the multiple
regression analysis helped us to identify the factors influencing cumulative
abnormal returns (CAR). The empirical results are as follows: Capital reduction
announcements lead to positive cumulative abnormal returns on stock prices.
Return on equity
(ROE) significantly impacts the effect of capital reduction announcements.
Firms with stable ROE instill greater investor confidence, positively
influencing stock prices. The debt and cash flow ratios positively and
significantly affect the impact of capital reduction announcements.
Additionally, firm size positively and significantly impacts capital reduction
announcements.
This
paper contributes by revealing the positive impact of capital reduction
announcements on stock prices and confirming the significant roles of return on
equity, debt ratio, cash flow ratio, and firm size in this effect. These
findings are crucial for investors and financial professionals as they provide
insights into the factors that can influence stock prices and help make
informed investment decisions.
