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Stock (geology)
About: Stock (geology) is a research topic. Over the lifetime, 31009 publications have been published within this topic receiving 783542 citations.
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TL;DR: In this article, the authors conducted a cross country study in Germany and the U.S. comparing participants' judgments about an identical set of German and American stocks and found that both test groups feel more competent about domestic stocks.
Abstract: Despite the advantages of international portfolio diversification, actual equity portfolio holdings reveal a strong bias towards domestic stocks. One hypothesis is that this bias can be explained by stock return expectations expressed in probability judgments. To test that hypothesis and to analyze the underlying effects that might cause distortions in investors' expectations, we conducted a cross country study in Germany and the U.S. comparing participants' judgments about an identical set of German and U.S. stocks. Results show that both test groups feel more competent about domestic stocks. The asymmetric perception of competence is connected with an asymmetric assessment of probabilities. For both test groups subjective probability distributions of stock returns are significantly less dispersed and more optimistic for stocks associated with high competence levels than for stocks associated with low competence levels.
220 citations
TL;DR: In this article, the authors uncover strong parallels between the explanatory power of these variables for individual stocks and for countries and find that country versions of BE/ME, market equity, and one-year past return (momentum) help explain the cross-section of expected individual stock returns within the U.S. and within other countries.
Abstract: Book-to-market ratio (BE/ME), market equity (ME), and one- year past return (momentum) (MOM) help explain the cross- section of expected individual stock returns within the U.S. and within other countries. Examining equity markets as a whole, in contrast to individual stocks, we uncover strong parallels between the explanatory power of these variables for individual stocks and for countries. First, country versions of BE/ME, ME, and MOM help explain the cross-section of expected country returns. Second, the January seasonal in ME's explanatory power for stocks also appears for countries. Third, portfolios formed by sorting stocks and countries on these variables produce similar patterns in profitability before and after the portfolio formation date.
220 citations
TL;DR: In this paper, the authors used a Markov switching model approach to investigate the dynamic linkages between the exchange rates and stock market returns for the BRICS countries (Brazil, Russia, India, China and South Africa).
220 citations
TL;DR: This paper found that stock thrifts exhibit greater profit variability during the 1982-1988 period and that conversions from mutual to stock ownership are associated with increased investment in risky assets and increased profit variability.
220 citations
TL;DR: This article examined whether the stock price response to bad and good earnings shocks changes as the relative level of the market changes and found that the difference between bad news and good news earnings response coefficients rises with the market.
Abstract: We examine whether the price response to bad and good earnings shocks changes as the relative level of the market changes. The study is based on a complete sample of annual earnings announcements during the period 1988 to 1998. The relative level of the market is based on the difference between the current market P/E and the average market P/E over the prior 12 months. We find that the stock price response to negative earnings surprises increases as the relative level of the market rises. Furthermore, the difference between bad news and good news earnings response coefficients rises with the market. ONE OF THE LONGEST RUNNING empirical debates in finance regards the relative pricing of"value" and "glamour" stocks. Beginning with early work by Basu (1983) and Stattman (1980), evidence has accumulated that excess returns on value stocks-that is, the issues of companies for which the ratio of earnings, cash flow, or book value per share is large relative to stock price-are greater than returns on glamour stocks, for which these ratios are small. On one side, Fama and French (1992, 1993, 1995, 1996) argue that the observed differential between the returns on value and glamour stocks represents a risk premium. The alternative view, articulated by Lakonishok, Shleifer, and Vishny (1994), is that the market fails to efficiently price value and glamour stocks. Extending Lakonishok et al. (1994), recent work in behavioral finance by, for example, Barberis, Shleifer, and Vishny (BSV, 1998) and Daniel, Hirshleifer, and Subrahmanyam (1998) argues that the value/glamour effect is the result of investor psychology. In particular, the model in BSV allows for investor underreaction (in the intermediate term) to single shocks and investor overreaction (in the longer term) to a series of shocks. This model also implies an asymmetry in the returns to value and glamour stocks following a news shock. Following a string of positive shocks observed in, say, glamour stocks, the investor in this model expects another positive shock, that is, he expects the earnings to trend. If good news is announced, the market re
219 citations