Authors : Vladimir F. Ukolov, Alexander V. Solomatin, Alexander V. Ukolov and Yaroslav V. Solomatin
Abstract: In this research we study how the release of the product to the market (release of computer game in this case) may affect the share price of its developer/publisher. Financial data were obtained for 9 public companies-developers/publishers of computer games which satisfy three pre-defined criteria. Then all games developed/published by the companies were examined and 69 games published during period from 2004-2013 were selected in accordance with three other criteria. After that the data were processed by two methodologies. The first methodology is a set of ordinary linear regressions where the dependent variable is the cumulative daily return on shares of a developer/publisher of the game and the explanatory variable are the factors of the financial performance of the company, industry, country as well as the actual and the expected quality of the game. The second methodology is a type of event analysis in which the dependent variables are abnormal return and cumulative return of excessive shares. In both cases for estimation of real quality of the game average expert score from Metacritic website was used whereas expected quality was modeled using adaptive expectations method which took into account real quality of previous games of corresponding developer/publisher. With the first method it was found that the release of information about the game and the quality of the game itself increases the quality of the forecast the company’s share price by >25-45% but only for the first two days after the release. The results of the second method show that the release of any game causes a short-term excessive increase in the share price by 1.83% and with the release of a “good” game causes a 3.96% increase. The results can be used by investors to obtain additional return and by management of manufacturing companies to understand better the factors which influence the value of their company. These results also carry inference that the release of the product (computer game) has a positive short-term impact on the share price of the manufacturing company, especially if the quality of the product turned out to be higher than expected.
Vladimir F. Ukolov, Alexander V. Solomatin, Alexander V. Ukolov and Yaroslav V. Solomatin, 2016. The Impact of a Final Product Release to the Share Price of a Manufacturing Company. International Business Management, 10: 4890-4897.