Stock (geology)

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

Oil Prices and the Stock Market

Abstract: This paper develops a novel method for classifying oil price changes as supply or demand driven and documents several new facts about the relation between oil prices and stock returns. Demand shocks are strongly positively correlated with market returns, while supply shocks have a strong negative correlation. The negative eects of supply shocks are concentrated in rms which produce consumer goods, and are also strongest for oil importing countries. Demand shocks are identied as returns to an index of oil producing rms which are orthogonal to unexpected changes in the VIX index. Supply shocks are oil price changes which are orthogonal to demand shocks and changes in the VIX. Theoretical and empirical evidence are presented in support of this strategy.

The Rise of Independent Directors in the United States, 1950-2005: Of Shareholder Value and Stock Market Prices

Abstract: Between 1950 and 2005, the composition of large public company boards dramatically shifted towards independent directors, from approximately 20% independents to 75% independents. The standards for independence also became increasingly rigorous over the period. The available empirical evidence provides no convincing explanation for this change. This Article explains the trend in terms of two interrelated developments in U.S. political economy: first, the shift to shareholder value as the primary corporate objective; second, the greater informativeness of stock market prices. The overriding effect is to commit the fi rm to a shareholder wealth maximizing strategy as best measured by stock price performance. In this environment, independent directors are more valuable than insiders. They are less committed to management and its vision. Instead, they look to outside performance signals and are less captured by the internal perspective, which, as stock prices become more informative, becomes less valuable. More controversially, independent directors may supply a useful friction in the operation of control markets. Independent directors can also be more readily mobilized by legal standards to help provide the public goods of more accurate disclosure (which improves stock price informativeness) and better compliance with law. In the United States, independent directors have become a complementary institution to an economy of firms directed to maximize shareholder value. Thus, the rise of independent directors and the associated corporate governance paradigm should be evaluated in terms of this overall conception of how to maximize social welfare.

Implications of the Discreteness of Observed Stock Prices

Abstract: Stock prices on the organized exchanges are restricted to be divisible by 1/8. Therefore, the "true" price usually differs from the observed price. This paper examines the biases resulting from the discreteness of observed stock prices. It is shown that the natural estimators of the variance and all of the higher order moments of the rate of returns are biased. An approximate set of correction factors is derived and a procedure is outlined to show how the correction can be made. The natural estimators of the "beta" and of the variance of the market portfolio, on the other hand, are "nearly" unbiased. THE BEHAVIOR OF STOCK PRICES has been an issue of interest to the financial economist for many years. This interest resulted in a growing number of empirical studies which attempt to estimate this behavior (e.g., Blattberg and Gonedes [2], Fama [6], Fama and Roll [7, 8], Barnea and Downes [1]). To date, stock price behavior is estimated under the assumption that the observed trading price is the "true" equilibrium price. However, observed stock prices and stock price changes on the organized exchanges are restricted to multiples of 1/8 of a dollar.1 Therefore, if the "true" distribution of stock prices is continuous, an observed trading price can be different from the "true" price. This paper examines the biases in estimating the moments of stock price changes caused by the discreteness of observed stock prices. The major focus of the paper is in noting this problem, providing a model which explains the source of these biases, and quantifying their size. Section I demonstrates that due to the discrete nature of observed stock prices the natural estimators for the variance and for the higher order moments of the rate of returns are biased upward. This bias is larger for stocks with lower prices and smaller standard deviation. For instance, assuming that the standard deviation, a, is 0.001, the stock price is one dollar, the "true" probability distribution of stock prices is lognormal, and the observed prices are as close as possible to the "true" prices, then the natural estimator of r has expectation 0.01400; hence, it is biased upward by 1300%. Significant biases have important implications in option pricing. We derive an approximate set of correction factors which can be applied to the