Mispricing Of Stocks And Firm Investment In Competitive Industries How Do They Influence Each Other PDF Download
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Author | : Jonas Junk |
Publisher | : GRIN Verlag |
Total Pages | : 41 |
Release | : 2020-05-20 |
Genre | : Business & Economics |
ISBN | : 3346171167 |
Download Mispricing of Stocks and Firm Investment in Competitive Industries. How Do They Influence Each Other? Book in PDF, ePub and Kindle
Bachelor Thesis from the year 2017 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 1.3, University of Münster, language: English, abstract: The existing research focuses on two channels how stock (mis-)pricing influences firm investment. On the one hand, the informational role of prices is examined. The general conclusion shared by many papers is as follows: managers learn from high prices that the aggregated opinion of investors sees promising investment opportunities. Hence, decision makers invest because they either learn from actual new information or they want to cater the investors and keep the stock prices high because of personal incentives. On the other hand, the financing role of equity is investigated. Many papers come to the same conclusion. Mispriced stocks are equal to misvalued eq-uity. Consequently, if stocks are overpriced the cost of financing through issuance of new shares declines. If the cost of financing declines, more in-vestment opportunities seem to be promising. Therefore, the firm’s investment activity increases. Additionally, third parties and potential debt lenders like banks evaluate the firm based on the stock performance amongst other aspects. If the stock price is high banks are more likely to issue credit and reduce their demands concerning the terms of debt (e.g. decrease inter-est rate). This is particularly important for financially constrained firms which are only able to invest in new projects if they are able to raise capital on their own. By following the approach of Polk and Sapienza (2009, pp. 191-194), my thesis examines if the relation of firm investment to stock mispricing is influenced by market concentration. At first, I regress firm investment on mispricing, investment opportunities and cash flow proxies on my whole sample. Afterwards I build sub samples based on market concentration and conduct the same regression on those sub samples again. Thereby, my re-search adds the dimension of market competition to the existing research. The thesis is organized as follows. In section 2 I briefly sum up the status quo in terms of research on the relation between mispricing and investment behavior. I state and explain my hypotheses in my third chapter. Following the explanations, I describe the data and methodology further in section 4. After evaluating my empirical results and documenting my robustness tests in section 5, I present my conclusions in chapter 6.
Author | : Xin (Simba) Chang |
Publisher | : |
Total Pages | : 33 |
Release | : 2006 |
Genre | : |
ISBN | : |
Download The Real Impact of Stock Market Mispricing - Evidence from Australia Book in PDF, ePub and Kindle
Using a large panel of Australian firms, we investigate if mispricing in the stock market has an impact on firm-level investment. A significantly positive relation is documented between investment and the proxies for mispricing, suggesting that overpriced (underpriced) firms tend to overinvest (underinvest). Furthermore, we find that equity-dependent firms display a more pronounced sensitivity of investment to stock misvaluation than do nonequity-dependent firms. Taken together, our findings evidence that mispricing in Australian capital markets may have significant influence on the real economy, and the influence works though an equity-financing channel.
Author | : Sushil Bikhchandani |
Publisher | : |
Total Pages | : 38 |
Release | : 2000 |
Genre | : Capital market |
ISBN | : |
Download Herd Behavior in Financial Markets Book in PDF, ePub and Kindle
Author | : Hersh Shefrin |
Publisher | : College Ie Overruns |
Total Pages | : 300 |
Release | : 2017-04-16 |
Genre | : Corporations |
ISBN | : 9781259254864 |
Download Behavioral Corporate Finance Book in PDF, ePub and Kindle
Author | : Roger G. Ibbotson |
Publisher | : CFA Institute Research Foundation |
Total Pages | : 128 |
Release | : 2018 |
Genre | : Business & Economics |
ISBN | : 1944960619 |
Download Popularity: A Bridge between Classical and Behavioral Finance Book in PDF, ePub and Kindle
Classical and behavioral finance are often seen as being at odds, but the idea of “popularity” has been introduced as a way of reconciling the two approaches. Investors like or dislike various characteristics of securities for rational reasons (as in classical finance) or irrational reasons (as in behavioral finance), which makes the assets popular or unpopular. In the capital markets, popular (unpopular) securities trade at prices that are higher (lower) than they would be otherwise; hence, the shares may provide lower (higher) expected returns.This book builds on this idea and expands it in two major ways. First, it introduces a rigorous asset pricing model, the popularity asset pricing model (PAPM), which adds investor preferences for security characteristics other than the risk and expected return that are part of the capital asset pricing model. A major conclusion of the PAPM is that the expected return of any security is a linear function of not only its systematic risk (beta) but also of all security characteristics that investors care about. The other major contribution of the book is new empirical work that, while confirming the well-known premiums (such as size, value, and liquidity) in a popularity context, supports the popularity hypothesis on the basis of portfolios of stocks based on such characteristics as brand value, sustainable competitive advantage, and reputation. Popularity unifies the factors that affect price in classical finance with those that drive price in behavioral finance, thus creating a unifying theory or bridge between classical and behavioral finance.
Author | : Andrew Ang |
Publisher | : Now Publishers Inc |
Total Pages | : 99 |
Release | : 2011 |
Genre | : Business & Economics |
ISBN | : 1601984685 |
Download The Efficient Market Theory and Evidence Book in PDF, ePub and Kindle
The Efficient Market Hypothesis (EMH) asserts that, at all times, the price of a security reflects all available information about its fundamental value. The implication of the EMH for investors is that, to the extent that speculative trading is costly, speculation must be a loser's game. Hence, under the EMH, a passive strategy is bound eventually to beat a strategy that uses active management, where active management is characterized as trading that seeks to exploit mispriced assets relative to a risk-adjusted benchmark. The EMH has been refined over the past several decades to reflect the realism of the marketplace, including costly information, transactions costs, financing, agency costs, and other real-world frictions. The most recent expressions of the EMH thus allow a role for arbitrageurs in the market who may profit from their comparative advantages. These advantages may include specialized knowledge, lower trading costs, low management fees or agency costs, and a financing structure that allows the arbitrageur to undertake trades with long verification periods. The actions of these arbitrageurs cause liquid securities markets to be generally fairly efficient with respect to information, despite some notable anomalies.
Author | : Charles F. Manski |
Publisher | : Princeton University Press |
Total Pages | : 184 |
Release | : 2019-09-10 |
Genre | : Business & Economics |
ISBN | : 0691194734 |
Download Patient Care Under Uncertainty Book in PDF, ePub and Kindle
For the past few years, the author, a renowned economist, has been applying the statistical tools of economics to decision making under uncertainty in the context of patient health status and response to treatment. He shows how statistical imprecision and identification problems affect empirical research in the patient-care sphere.
Author | : Merritt B. Fox |
Publisher | : Columbia University Press |
Total Pages | : 612 |
Release | : 2019-01-08 |
Genre | : Business & Economics |
ISBN | : 023154393X |
Download The New Stock Market Book in PDF, ePub and Kindle
The U.S. stock market has been transformed over the last twenty-five years. Once a market in which human beings traded at human speeds, it is now an electronic market pervaded by algorithmic trading, conducted at speeds nearing that of light. High-frequency traders participate in a large portion of all transactions, and a significant minority of all trade occurs on alternative trading systems known as “dark pools.” These developments have been widely criticized, but there is no consensus on the best regulatory response to these dramatic changes. The New Stock Market offers a comprehensive new look at how these markets work, how they fail, and how they should be regulated. Merritt B. Fox, Lawrence R. Glosten, and Gabriel V. Rauterberg describe stock markets’ institutions and regulatory architecture. They draw on the informational paradigm of microstructure economics to highlight the crucial role of information asymmetries and adverse selection in explaining market behavior, while examining a wide variety of developments in market practices and participants. The result is a compelling account of the stock market’s regulatory framework, fundamental institutions, and economic dynamics, combined with an assessment of its various controversies. The New Stock Market covers a wide range of issues including the practices of high-frequency traders, insider trading, manipulation, short selling, broker-dealer practices, and trading venue fees and rebates. The book illuminates both the existing regulatory structure of our equity trading markets and how we can improve it.
Author | : Aswath Damodaran |
Publisher | : John Wiley & Sons |
Total Pages | : 615 |
Release | : 2012-06-22 |
Genre | : Business & Economics |
ISBN | : 1118235614 |
Download Investment Philosophies Book in PDF, ePub and Kindle
The guide for investors who want a better understanding of investment strategies that have stood the test of time This thoroughly revised and updated edition of Investment Philosophies covers different investment philosophies and reveal the beliefs that underlie each one, the evidence on whether the strategies that arise from the philosophy actually produce results, and what an investor needs to bring to the table to make the philosophy work. The book covers a wealth of strategies including indexing, passive and activist value investing, growth investing, chart/technical analysis, market timing, arbitrage, and many more investment philosophies. Presents the tools needed to understand portfolio management and the variety of strategies available to achieve investment success Explores the process of creating and managing a portfolio Shows readers how to profit like successful value growth index investors Aswath Damodaran is a well-known academic and practitioner in finance who is an expert on different approaches to valuation and investment This vital resource examines various investing philosophies and provides you with helpful online resources and tools to fully investigate each investment philosophy and assess whether it is a philosophy that is appropriate for you.
Author | : Peter Ove Christensen |
Publisher | : Springer Science & Business Media |
Total Pages | : 675 |
Release | : 2006-03-30 |
Genre | : Business & Economics |
ISBN | : 0387265996 |
Download Economics of Accounting Book in PDF, ePub and Kindle
This book provides an integrated, technical exposition of key concepts in agency theory, with particular emphasis on analyses of the economic consequences of the characteristics of contractible performance measures, such as accounting reports. It provides a succinct source for learning the fundamentals of the economics of incentives. It will appeal to accounting researchers as well as those in other disciplines who are interested in the economics of management incentives.