Stock (geology)

About: Stock (geology) is a research topic. Over the lifetime, 31009 publications have been published within this topic receiving 783542 citations.

Shareholder trading practices and corporate investment horizons

Abstract: We investigate how shareholder trading practices might be linked to corporate investment horizons. We examine two possible linkages and analyze a range of data relevant to them. The first is excess volatility, which occurs when stock prices react not only to news about economic fundamentals, but also to trades based on non-fundamental factors. Excess volatility could lead to a higher cost of capital, and thereby reduce long-term corporate investment. The second linkage derives from an information ea between management and outside shareholders. In the presence of such a gap, maximizing short-run and long-run stock prices are not the same thing. Management may be able to raise current stock prices by undertaking certain actions that will reduce long-run value. In such a case, management faces the dilemma of which shareholders to please: those who do not plan to hold the stock for the long-run versus those who do. As shareholder horizons shorten, it can become more difficult to focus exclusively on maximizing long-run value. With respect to excess volatility, our basic conclusions are that neither changes in trading practices over time nor differences in trading practices across countries contribute significantly to any underinvestment problem. There is no evidence to indicate that measures to reduce trading volume (such as transactions taxes) would lower stock-price volatility in a way that would stimulate investment. With respect to the information gap hypothesis, we find "circumstantial' evidence consistent with certain preconditions for underinvestment. This is not, however, evidence of underinvestment itself. In addition, many of the forces that can lead to underinvestment -- such as hostile takeovers -- are also related to other, positive aspects of economic performance. Policy responses therefore involve a difficult set of tradeoffs. (This abstract was borrowed from another version of this item.)

Patterns in Japanese Common Stock Returns: Day of the Week and Turn of the Year Effects

Abstract: Stock markets in the United States and foreign countries exhibit a strong weekly seasonal,1 an empirical regularity for which no theoretical explanation has been found. One's belief in this phenomenon would be strengthened if it is known to also occur in capital markets separated from those in the United States by distance, institutional arrangements, and culture. This paper extends the results found in [5] and more closely examines the day to day stock market returns for Japan. While we find a weekly seasonal in Japan, its nature is significantly different in a statistical sense from the American one. For example, the lowest mean return in Japan occurs on Tuesday?not Monday, as in the United States. Thus, while the "day of the week" effect for American stocks has been casually called the "weekend" effect, it should not be referred to in this way for Japanese stocks. The next part of the paper examines causes for the unique Japanese seasonal. We investigate whether the results in Japan are associated with those in the United States, and, in particular, consider whether the low Tuesday return in Japan and the low Monday return in the United States are due to time zone differ? ences. The settlement process and the measurement error problem also are treated. We next consider the relationship between foreign exchange returns and stock market returns. The seasonal in daily foreign exchange returns does not "offset" the seasonal in daily stock market returns. Thus, both Japanese and American investors confront a day of the week effect in the Japanese stock mar? ket. Our data also allow us to investigate the "turn ofthe year" effect. Japanese stock returns in January are significantly above the returns during the rest of the year. However, unlike some reports using U.S. data (see [12] and [13]), we find no interaction in Japan between the Monday effect and the January effect.