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THE INVESTIGATION OF INVESTORS’ OVERREACTION TO PATTERNS OF PAST FINANCIAL PERFORMANCE MEASURES: EVIDENCE FROM TEHRAN STOCK EXCHANGE

Journal of Business and Finance

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Title THE INVESTIGATION OF INVESTORS’ OVERREACTION TO PATTERNS OF PAST FINANCIAL PERFORMANCE MEASURES: EVIDENCE FROM TEHRAN STOCK EXCHANGE
 
Creator Abarghoohi, Ahmad F.
khorami, Asghar K.
Yazdani, Atoosa
 
Subject Formation period of portfolio, Test period of portfolio, Winner portfolio, Loser portfolio, Overreaction
 
Description The researchers who have studied overreaction of stockholders have concluded that investors overreact to the past financial performance of firms.  Firm that achieved high past financial performance tend to be overvalued; eventually, stock prices of these firms return to their fundamentals, resulting in low returns over longer horizons. On the other hand, firms that experienced poor past financial performance become under-priced and subsequently their shares earn higher return. This article examines the overreaction of stockholders of Tehran Stock Exchange. This study was performed without controlling the effect of B/M ratio and ‘market capitalizations (size)’ in the first stage and by controlling the B/M ratio and size as risk criteria in the second stage. Time period of research was eight years since 1999 to 2006. Our sample is constructed from all stocks traded on the Tehran Stock Exchange (TSE) and the research method was Portfolio Test. Two sample independent t-test was used for data analysis. The results indicate that stockholders in Tehran Stock Exchange overreact to earnings before extraordinary items and discontinued operations, sale and return of Stock but do not overreact to cash flow variable.
 
Publisher Journal of Business and Finance
 
Contributor —
 
Date 2013-12-25
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
—
 
Format application/pdf
 
Identifier http://www.escijournals.net/index.php/JBF/article/view/359
 
Source Journal of Business and Finance; Vol 1, No 3 (2013): J. Bus. Financ.; 105-111
2305-1825
2308-7714
 
Language eng
 
Relation http://www.escijournals.net/index.php/JBF/article/view/359/243
 
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