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 the above.

Question

Quizplus · Accepted Answer

The rise in stock prices following the death of an active founding CEO suggests that the market perceives the CEO's leadership as a negative influence on the firm's value, and their departure is seen as an opportunity for positive change.

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