Are Stock Prices Aligned with Investors’ Expectations? Evidence from Financial Sector

Are Stock Prices Aligned with Investors’ Expectations? Evidence from Financial Sector

Authors

  • Victor Bahhouth University of North Carolina, Pembroke, USA.
  • Rebecca Gonzalez University of North Carolina, Pembroke, USA.
  • William Stewart Thomas University of North Carolina, Pembroke, USA.

DOI:

https://doi.org/10.55220/25766759.v7i1.119

Keywords:

Volatility, Risk, Financial measures, Correlation, Market corrections, Stock Price, Expectations.

Abstract

Stock prices change as news become available about businesses; the change in price process is a reflection of financial markets’ expectations about firms’ performance. Consequently both, financial measures & fundamental measures change as a result. Researchers explored how well the financial measures explain firms’ performance and future stock price movements. The purpose of this study is to explore if the volatility of financial measures are better predictors of stock price movements – an empirical evidence from the financial sector during 2008 market correction. Study develops a two-step scenario is developed; 1- The first step examines the use of the financial measures as leading measures to project stock price movement during 1998 and 2007 period. 2- The second step examines the co-movement of financial measures volatility with stock prices during the same period. Study shows evidence that the co-movement between Price/ Book volatility and that of stock price during 2008 market correction is significant and consistent across the six main financial industries.

Downloads

Download data is not yet available.

Downloads

Published

2022-04-06

How to Cite

Bahhouth, V. ., Gonzalez, R. ., & Thomas, W. S. . (2022). Are Stock Prices Aligned with Investors’ Expectations? Evidence from Financial Sector. Asian Business Research Journal, 7, 14–20. https://doi.org/10.55220/25766759.v7i1.119

Issue

Section

Articles
Loading...