Economics, Econometrics and Finance
8 years ago

Stock price misleads investors, impacts news on stock returns significantly.

The Nature of News, Insider Ownership, Stock Price and Stock Returns
Ruey-Shii Chen, Sing-Yu Lee, Sheng-yun Yu, Chun-Chieh Hsieh

Paper Summary

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The study explores how news, insider ownership, stock price, and stock returns are connected. It found that high stock prices can mislead investors and reduce the impact of news on stock returns. When stock prices are high, investors may ignore analyst forecasts. But when prices drop, analyst forecasts become more important.