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Behavioral Finance Case

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For many years, the large retail firm Wal-Mart chose not to provide guidance. The firmâ??s legendary founder, Sam Walton, wrote in his autobiography that he did not care what the market thought. Beginning in 1994, Wal-Martâ??s earnings announcements generated a string of negative surprises. In the resulting post-earnings-announcement drift, Wal-Martâ??s cumulative abnormal return relative to the S&P 500, drifted down for the subsequent four years. Wal-Martâ??s situation changed dramatically in 1998. An article appearing in Fortune magazine described Wal-Mart stock as being hot again, and noted that the reason stemmed from earnings. The article described Wal-Mart as having applied its â??Main Street marketing skillsâ? to its interactions with Wall Street analysts. Discuss what it means to apply â??Main Street marketing skills.â?

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For many years, the large retail firm Wal-Mart chose not to provide guidance. The firmâ??s legendary founder, Sam Walton, wrote in his autobiography that he did not care what the market thought. Beginning in 1994, Wal-Martâ??s earnings announcements generated a string of negative surprises. In the resulting post-earnings-announcement drift, Wal-Martâ??s cumulative abnormal return relative to the S&P 500, drifted down for the subsequent four years. Wal-Martâ??s situation changed dramatically in 1998. An article appearing in Fortune magazine described Wal-Mart stock as being hot again, and noted that the reason stemmed from earnings. The article described Wal-Mart as having applied its â??Main Street marketing skillsâ? to its interactions with Wall Street analysts. Discuss what it means to apply â??Main Street marketing skills.â?
The Main Street Marketing skill of Wal-Mart in this context simply means communication skills of Wal-Mart personnel. In particular the financial staff of Wal-Mart has been more accessible ...

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