Earning Changes and the Investors' Reactions
Several decades have passed when the modern portfolio theory dominated the arena in illustrating and explaining investors' performance. Such domination was based on some assumptions such as rational behavior of investors, and the Efficiency Market Hypothesis. Due to the existence of experimenta...
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doaj-e4f1faeeb76e4f878404f884f29b0f5f2020-11-24T21:47:59ZfasAlzahra Universityراهبرد مدیریت مالی2345-32142538-19622013-09-011210513010.22051/jfm.2014.965965Earning Changes and the Investors' Reactionsseyed jalal sadeghi- sharif0mohammad asoolian1shahid beheshti universityshahid beheshti universitySeveral decades have passed when the modern portfolio theory dominated the arena in illustrating and explaining investors' performance. Such domination was based on some assumptions such as rational behavior of investors, and the Efficiency Market Hypothesis. Due to the existence of experimental testimonies, inexplicable by the traditional models, the field of behavioral finance through the use of psychology, the social sciences and anthropology has tried to offer a more viable explanation as to the investors' behavior. This paper attempts to study the investors' behavior vis-à-vis the new earning announcements. It uses the prospect theory of Kahnman & Tversky, and tries to answer this question that: whether the prior earning announcement can be used as a reference point. In order to conduct this research, the behavior of the capital market in response to published announcements in the official site of the Tehran Stock Exchange (www.codal.ir) has been studied during 2006-2011 (1385-1390) in a three-day period by using the regression models. The results show that investors' reactions to an increase and a decrease in earnings per share are different. This behavior was explained by the value function of Kahnman & Tversky.http://jfm.alzahra.ac.ir/article_965_ad3c108d927aa442f7c36c342be0097a.pdfBehavioral Financethe Reference Pointearnings changesAbnormal PerformanceAbnormal Volume of Transactions |
collection |
DOAJ |
language |
fas |
format |
Article |
sources |
DOAJ |
author |
seyed jalal sadeghi- sharif mohammad asoolian |
spellingShingle |
seyed jalal sadeghi- sharif mohammad asoolian Earning Changes and the Investors' Reactions راهبرد مدیریت مالی Behavioral Finance the Reference Point earnings changes Abnormal Performance Abnormal Volume of Transactions |
author_facet |
seyed jalal sadeghi- sharif mohammad asoolian |
author_sort |
seyed jalal sadeghi- sharif |
title |
Earning Changes and the Investors' Reactions |
title_short |
Earning Changes and the Investors' Reactions |
title_full |
Earning Changes and the Investors' Reactions |
title_fullStr |
Earning Changes and the Investors' Reactions |
title_full_unstemmed |
Earning Changes and the Investors' Reactions |
title_sort |
earning changes and the investors' reactions |
publisher |
Alzahra University |
series |
راهبرد مدیریت مالی |
issn |
2345-3214 2538-1962 |
publishDate |
2013-09-01 |
description |
Several decades have passed when the modern portfolio theory dominated the arena in illustrating and explaining investors' performance. Such domination was based on some assumptions such as rational behavior of investors, and the Efficiency Market Hypothesis. Due to the existence of experimental testimonies, inexplicable by the traditional models, the field of behavioral finance through the use of psychology, the social sciences and anthropology has tried to offer a more viable explanation as to the investors' behavior. This paper attempts to study the investors' behavior vis-à-vis the new earning announcements. It uses the prospect theory of Kahnman & Tversky, and tries to answer this question that: whether the prior earning announcement can be used as a reference point. In order to conduct this research, the behavior of the capital market in response to published announcements in the official site of the Tehran Stock Exchange (www.codal.ir) has been studied during 2006-2011 (1385-1390) in a three-day period by using the regression models. The results show that investors' reactions to an increase and a decrease in earnings per share are different. This behavior was explained by the value function of Kahnman & Tversky. |
topic |
Behavioral Finance the Reference Point earnings changes Abnormal Performance Abnormal Volume of Transactions |
url |
http://jfm.alzahra.ac.ir/article_965_ad3c108d927aa442f7c36c342be0097a.pdf |
work_keys_str_mv |
AT seyedjalalsadeghisharif earningchangesandtheinvestorsreactions AT mohammadasoolian earningchangesandtheinvestorsreactions |
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