Sign In
Not register? Register Now!
Essay Available:
Pages:
14 pages/≈3850 words
Sources:
15 Sources
Style:
Harvard
Subject:
Accounting, Finance, SPSS
Type:
Essay
Language:
English (U.S.)
Document:
MS Word
Date:
Total cost:
$ 65.52
Topic:

Good And Bad News On Stock Market

Essay Instructions:

Choose one or few companies and use data analysis to explore the impact of good news and bad news on their stock market.


 


Applied Finance Project Titles (2018/19)


The titles and details of the Applied Finance Projects are listed below. Each topic has a title, a short description of the topic, some suggestions of data and data sources you might use if the data are not provided, suggestions how you might conduct the research and a short list of some key readings. This is meant to provide an introduction to the topic only and you may want to go beyond these core readings. You can identify additional readings using, for example, the Library’s on-line search facilities or the Google. You may decide, in consultation with your project supervisor, to focus the research in a particular direction and/or exploit a different source of data than that suggested below.


In the topic list there are often several topics which are related (e.g. doing the same project but for different data sets which may be different countries). It might be useful to cross- reference to the related topics as there may be useful suggestions on methods, data and readings in broadly similar topics.


7. What is the effect of good and bad “news” on stock market prices? 


Outline: The recent BP oil spill in the Gulf of Mexico is by far the largest oil spill in the history of the oil industry. Aside from the environmental and economic impacts on people in and around the Gulf of Mexico, what effect did it have on share prices of BP, and other large oil companies? We might expect that the share price was affected by the release of news about the severity of the spill and clean up costs (i.e. new information) and also by public anti-BP statements by Obama and others. Were other oil companies affected, and by how much compared to BP?


The effect of good and bad news on share prices is a particular area of study for economists interested in the efficient market hypothesis. How did the SARS outbreak in China in April 2003 affect the Hang Seng? How did the fake powdered milk case in Fuyang in 2004 affect stock market confidence in China and more specifically shares in food processing or food producing companies? What about the ill health and eventual death of Steve Jobs – how was the Apple share price affected? You could investigate the effect of news of a merger, or collapse of a deal, discovery of a new resource, outbreak of war or peace etc, election of a new party to government etc. Rather than follow an individual firm’s share price, you could examine an overall share price index and examine the effect of “news” on its value.


This topic can potentially be chosen by several students, as long as each student chooses their own firm and news event (or events).


Methodology: A very simple approach would be to regress the daily share price on say, the market interest rate, and one or more dummy variables that capture “news” events. You  


will find that the literature on stock market efficiency has more sophisticated models. Start with something simple and then build on that.


Data: Share price data are easily accessible on-line and if you have relevant cases you can choose the Chinese stock market. You need to decide if you want daily prices or something averaged over a period, or measures of volatility that you will construct form the raw price data. You need to make sure you cover a sufficiently long period before and after the “events”. You might also want to access share price data on either the relevant industry as a whole, or of main rivals, to test if the share price you are following moved in line with other firms. You will need to construct 'news' events that might have affected the share price – good and bad news. This may require piecing together lots of info from media coverage. You may find it useful to construct a time-line of events (speeches, press releases, real events) and see if any of those are followed by drops or rallies in the share price. Of course, some news may have been good.


Readings:


Richard J. Cebula, James V. Koch and Robert N. Fenili, (2011) “Do Investors Care if Steve Jobs is Healthy?” Atlantic Economic Journal Special Issue: Current Issues in Financial Economics" vol 39 Issue:1, pp59-70.


L S Copeland (1989), Market efficiency before and after the crash, Fiscal Studies vol 10(3), 13-33


M Firth (1986), The efficient markets theory, in M Firth and S M Keane (eds), Issues in Finance, Philip Allan


P D Jackson and A D O'Donnell (1985), The effects of stamp duty on equity transactions and prices in the UK Stock Exchange, Bank of England Discussion Paper 25


R H Thaler (1987), Anomalies, Journal of Economic Perspectives, vol 1(1), 197-201, and vol 1(2), 169-178


On oil spills (pre-BP Gulf of Mexico):
Ronald J. Alsop (2004) “Corporate reputation: Anything but superficial – the deep but fragile


nature of corporate reputation” Journal of Business Strategy, Vol. 25 Iss: 6, pp.21 – 29


Kasim Alli, Samantha Thapa and Kenneth Yung ((1994), “Stock Price Dynamics In Overlapped Market Segments: Intra And Inter-Industry Contagion Effects”. Journal of Business Finance & Accounting, 21: 1059–1070


Herbst, Anthony, John Marshall and John Wingender (1996) “An Analysis of the stock market response to the Exxon-Valdez disaster” Global Finance Journal 7(1): 101-114 – available freely on-line


Essay Sample Content Preview:

What Is the Effect of Good and Bad “News” On Stock Market Prices?
Name
Institution
Course
Due Date
What Is the Effect of Good and Bad “News” On Stock Market Prices?
Introduction
The evolution of technology within the last two decades has had an impact on both the media and the stock market since they are capable of operating in real time. The technological innovations have led to an increase in the level of trading activities which also includes the increase in the number of investors that enter the stock market. At the same time, the expansion of the media especially in the use of the internet is capable of providing the public with efficient, timely and voluminous information through different digital platforms. There are few studies that have investigated the correlation and impact of media platform on the stock prices. The stock market has been considered as one of the fast-paced sectors of the economy, therefore, fascinating investors through the centuries (The Emerging Future, 2012).
The evolvement of technology has made the sector to grow substantially at an exponential rate, therefore, making the market to open up to the public facilitating the speedy processing of transactions (The Emerging Future, 2012). The improvement in technology ensures that stock markets run fully on real time since there are appropriate tools such as software that makes the sector attractive to both big investors who potentially affects the market index and the small private investors who invest in the same stock market. The study by Yilmaz et al., (2015) shows that the conversion of the stock market into a real-time job with a variation of stock price taking place almost every time. This has led to an increase in the activities within the stock market all over the world. The author also reveals the fact that the implementation of a sophisticated platform as a stock exchange tool influences the overall liquidity within the market. According to Brogaard et al., (2013), besides the technological advancement helping in the improvement of the trading activities within the stock market, the high-frequency traders (HFTs) has been granted the benefit of accessing the markets including facilitation of price activities.
Taiwan’s Stock Market Reaction to Political Leadership News
The top leadership power struggles in Taiwan between the years 2005 until 2014 have resulted into either “good” or “Bad” news, which have ultimately affected the Stock Market. There are significant differences in the reactions from the stock market even in the cases where the exchange rate fluctuated or were adjusted in accordance to performance across equity markets. In the emerging markets apart from the known asset pricing factors such as interest rate risk or credit risk, the political risk is less addressed by the literature. However, the political risk is considered as more influential to towards asset values within the emerging economies such as Taiwan. The focus in this case focuses on effects of news on leadership-shifting political events on the Taiwan’s financial market considered as part of the Greater China Region. Amongst the countries within the Greater China Region Taiwan is believed...
Updated on
Get the Whole Paper!
Not exactly what you need?
Do you need a custom essay? Order right now:
Order

You Might Also Like Other Topics Related to edgar allan poe:

HIRE A WRITER FROM $11.95 / PAGE
ORDER WITH 15% DISCOUNT!
Order Now