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What makes stock prices move? Fundamentals vs investor recognition

Journal

Financial Analysts Journal

Subject

Accounting

Publishing details

Financial Analysts Journal 2012 March/April Vol 68:2 p 30-50

Authors / Editors

Richardson S A;Sloan R;You H

Biographies

Scott Richardson

Publication Year

2012

Abstract

The authors synthesized and extended recent research demonstrating that investor recognition is a distinct, significant determinant of stock price movements. Realized stock returns are strongly positively related to changes in investor recognition, and expected returns are strongly negatively related to the level of investor recognition. Moreover, companies time their financing and investing decisions to exploit changes in investor recognition. Investor recognition dominates stock price movements over short horizons, whereas fundamentals dominate over longer horizons.

Available on ECCH

No


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