SHERP

Fundamental Stock Price and Investment

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Authors
Rhee, Changyong; Rhee, Wooheon
Issue Date
1995
Publisher
Seoul Journal of Economics
Citation
Seoul Journal of Economics 8 (No. 3 1995): 331-346
Keywords
COMPUSTATmicro datamarket fundamentals
Abstract
This paper examines the issue of whether a firm's investment decisions respond more to market fundamentals than to bubbles. Using firm level data from COMPUSTAT, we design various proxies for market fundamentals based on (i) the dividend approach, (ii) the dividend smoothing approach, and (iii) the earnings approach. From the aggregated micro data, we find that business investment responds more to market fundamentals than to bubbles. On the other hand, results from the panel regressions are inconclusive since most of the explanatory power of the investment regression is derived from the individual firm specific effect.
ISSN
1225-0279
Language
English
URI
http://hdl.handle.net/10371/1065
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College of Social Sciences (사회과학대학)Institute of Economics Research (경제연구소)Seoul Journal of EconomicsSeoul Journal of Economics vol.08(3) (Fall 1995)
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