| Summary: | 碩士 === 逢甲大學 === 企業管理學系 === 88 === The objective of this research is to know how financial newspaper headlines impact Taiwanese investors and what this information means to them. If investors were to overreact to these headlines, according to how overreaction theory is defined in financial text, they would tend to concern more about short term information, but on the other hand they would have unconcerned the company’s long term financial condition. After proving that investors overreact to headline information, we suggest how the investors could make beneficial investment decisions by this public information. The results are as following:
From the point of information content, in such as mergers, strategic alliances, company’s new investment, and expected increased earnings; they do have a positive implication, but in cases such as expected decreased earnings, illegal commitments, financial crisis, mismanagement and other misfortunes that can occur to a company, they have a negative implication. Headlines that have expected increased earnings are the most preferable and concerned for Taiwanese investors. A financial crisis is the most feared situation and concerned for Taiwanese investor. In summary, negative headline news made stock price fluctuate to a degree bigger than positive headlines.
From the point of overreaction, positive headlines had obvious investor reaction. When positive headline news unveiled, it made stock prices reverse in the short term. We can see Taiwanese investors are more pessimistic. Generally, after negative headlines news was unveiled, it took time to make stock prices reverse, but not in an obvious way. In positive headline news, we found out that Taiwanese investors who were short sighted and unconcerned the company’s long term development; from negative headline news we also found that investors real concern was about bad news, so Taiwanese investors are not totally unconcerned about their company’s long term development.
Finally, concerning investment strategy, if investors purchase stock because of a company’s positive headline news has been published, they won’t get return higher than the market return in the short term. Furthermore, investors shouldn’t purchase a company’s stock when that company’s negative headline news is published because it’s stock return is lower than the market return in the short term.
|
|---|
