The Impact Of O2O Strategy Announcements On The Market Value Of Firms:An Empirical Study In China

O2O(online to offline) which combines the offline business opportunities with the internet has been a popular e-commerce mode in China in recent years. It makes the consumers to buy daily necessities conveniently and quickly through the mobile terminals and will have a huge market space in the local business. From the perspective of the O2 O business mode, this paper seeks to document the relationship between O2 O announcements and the stock market reaction of listed firms. Based on the rational investors and the efficient capital market hypothesis, we examine the issues using event study methodology in this paper and assess the abnormal returns(ARs) and cumulative abnormal returns(CARs) to shareholders for 154 O2 O e-commerce initiatives announced by firms from 2013 to 2015 in the Shanghai and Shenzhen Stock Exchange in China. Furthermore, we develop and test hypotheses concerning market reactions to various factors such as industry type, strategy type, product type and risk prompt.The results suggest that O2 O e-commerce announcements do indeed increase the firms' market value. The CARs for manufacturing firms are significantly higher than non-manufacturing firms. Firms announcing self-built O2 O platforms and cooperation with other companies both have positive stock market reactions, while the CARs for self-built platform are significantly higher than the cooperative platform. The CARs for firms announcing with risk warning are significantly higher than those without risk warning. However, the CARs related to tangible products and intangible products in each event window are not statistically significant. These results will bring more financial support to firms conducting O2 O strategies and give some suggestions to managers and investors in financial market.