Why Dangdang's Shares Dropped

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Chinese e-commerce company Dangdang (NAS: DANG) were making investors say "Dang it!" today as they plummeted as much as 16% in intraday trading.

So what: If you were to make a list of red flags for a company, high up on that list is seeing the chief financial officer abruptly resign. Today, the company announced that CFO Conor Yang has called it quits.


Now what: These things do happen in the normal course of business, so not every CFO transition, or even resignation, means that investors should freak out. In Dangdang's case, Yang's resignation was described as being for "personal reasons." This really doesn't give investors much to work with -- are "personal reasons" that he wants more time to spend with his family? Or are "personal reasons" that he is fed up with the company for some reason? There probably won't be any immediate clarity on that question, so for now Dangdang investors may want to stay on their toes.

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At the time this article was published Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.

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