The Relationship Between Preannouncement Effect of New Products And Market Reaction: Pre- and Post-Iphone Launch
This paper uses the launch date of new iPhone products by Apple over the years and contrasts them as the reference point with the new flagship phones of HTC, LG, Samsung, Nokia, Sony, and Motorola. With the yearly launch date of Apple’s new iPhone products as the benchmark, difference analysis in abnormal returns was conducted among the phone products of various brand manufacturers launched earlier and later than iPhone launches from January 1, 2007 to December 31, 2017. The findings illustrate that this research believes the manufacturers should launch their new products before the new iPhones are launched. Since the launch dates of new iPhones every year are close to Q3 and previous research showed that Apple brand loyalty is the highest, consumers’ intention to purchase the mobile phones of other brands will decrease. As a result, there are significantly positive abnormal returns prior to the selling of new mobile phones in the first week, but after the selling day, they turn into negative abnormal returns. Moreover, the new mobile phones declared to be launched after the iPhone launch continuously have significantly positive abnormal returns. This research notes that new iPhone products for each year are worse than consumers’expectation. For instance, after Apple launched its new products at 0:00 on September 10, 2015 in Taiwan, Apple’s stock price in the U.S. did not benefit a lot from it. On the contrary, it declined nearly 2%. It also impactedTaiwanese shares as well as the performance of Apple supply chain firm later that day. The above-mentioned research presents the market response to the stock prices of various brand manufacturers when new iPhone products come into the market, so as to provide a reference to investors in different dimensions.
Keywords - Smart Phone, Event study, abnormal return, iPhone