Abstract
Since FY2015, the Ministry of Economy, Trade and Industry (METI) and the Tokyo Stock Exchange (TSE) have jointly been selecting the excellent Japanese firms for their efforts for IT utilization as “Competitive IT Strategy Companies.” This paper investigates and examines stock market reaction to the announcement of the selected Competitive IT Strategy Companies. We use an event study methodology with a market model on a sample selected in FY2018. Our empirical analysis shows a few reactions in stock returns around the event day. The cumulative average abnormal return (CAAR) during the event period [-5,0] is significantly positive at the 10% level. This result indicates that the stock market reaction may have started prior to the 2018’s announcement date. The findings suggest that this study demonstrates the effectiveness of public policy program by METI and TSE, and assists investors in making wise decisions before reacting to the announcement of this annual program.
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