Evidence on stock prices finds that the sudden death of a chief executive officer causes stock prices to fall and the sudden death of an active founding chief executive officer causes stock price to rise. This contrary evidence happens because:
A) markets are inefficient and unsure of the real value of the events.
B) death is inevitable and market prices are random.
C) things simply happen.
D) the value of the founding executive was a negative to the firm.
E) None of these.

Question

Quizplus · Accepted Answer

The market may perceive the founding executive as a hindrance to the firm's progress, so their sudden death could be seen as an opportunity for positive change, leading to a rise in stock prices.

Evidence on Stock Prices Finds That the Sudden Death of a Chief