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

Victor Bahhouth (), Rebecca Gonzalez () and William Stewart Thomas ()

Asian Business Research Journal, 2022, vol. 7, 14-20

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.

Keywords: Volatility; Risk; Financial measures; Correlation; Market corrections; Stock Price; Expectations. (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ecsenet.com/index.php/2576-6759/article/view/119/68 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ajn:abrjou:v:7:y:2022:i::p:14-20:id:119

Access Statistics for this article

More articles in Asian Business Research Journal from Eastern Centre of Science and Education
Bibliographic data for series maintained by Tracy William ( this e-mail address is bad, please contact ).