 Using fundamental analysis of financial information to explain unexpected market behaviourDaniel R. Brickner, Charles A. Brown and Mark Myring Global Business and Economics Review, 2007, vol. 9, issue 4, 366-380 Abstract: This paper extends prior research in the areas of fundamental analysis and the information content of losses in an effort to explain unexpected market behaviour in certain circumstances. Specifically, we develop expectations related to the relevance of fundamental financial signals to explain firm returns in cases in which earnings do not serve as an effective summary measure for valuation purposes. In such settings, we posit that market participants seek additional information sources, such as fundamental signals, to assist in firm valuation. Our results indicate that although earnings do not explain returns for firms sustaining losses, fundamental financial signals are value-relevant. Upon segregating our sample further, we find that the fundamental signals are significant in explaining returns for firms in which yearly returns appear to belie the direction of the firms' earnings. Taken together, these results support our expectations regarding the value-relevance of fundamental financial signals in certain settings. Keywords: fundamental analysis; negative earnings; earnings-return relation; capital markets; financial information; unexpected behaviour; market behaviour; firm valuation; financial signals; earnings; returns. (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ids:gbusec:v:9:y:2007:i:4:p:366-380 Access Statistics for this article More articles in Global Business and Economics Review from Inderscience Enterprises Ltd |
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