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What makes stock prices move? Fundamentals vs investor recognition


Financial Analysts Journal



Authors / Editors

Richardson S A;Sloan R;You H


Publication Year



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.

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