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When to Rein in the Stock Market

By Guest PostJuly 5, 2012Economybattle, failing business, investment bank, investor, lehman brothers, michigan state university, moral hazard, naveen khanna, richmond mathews, sec, short seller, stock market

EAST LANSING, Mich. — The stock market should be regulated only during times of extraordinary financial disruptions when speculators can destroy healthy businesses, according to a new study led by a Michigan State University scholar.

The study, in the Journal of Financial Economics, is one of the first to suggest when the U.S. Securities and Exchange Commission should get involved in the market.

The answer: rarely. The SEC should step in only when outside financial disruptions make it impossible for large shareholders to fend off “short sellers” – or speculators betting a company’s stock value will decrease, said Naveen Khanna, finance professor in MSU’s Broad College of Business. (more…)

Stock Market Stereotypes Undervalue Female Directors in The Short-Term

By Guest PostFebruary 27, 2012Economyaim, alan gregory, board appointment, female directors, ftse all share, gender differences, ian tonks, male directors, negative stereotypes, policy makers.value.representation of women, stereotypes, stock market, university of exeter

New research into how the stock market perceives the capabilities of female company directors finds that an initial negative response by investors is overturned in the longer term, once markets respond to corporate performance rather than stereotypes.

The study analysed the stock market response to male and female directors’ purchases of their own company shares, examining both the short-run and long-run stock market reaction response to directors’ trades.

Results suggest that the price reaction to male directors’ share activity is initially faster and larger than that for female directors, showing that the short-term market reaction retains a gender bias reflecting the prevalence of negative stereotypes; where the market reacts to beliefs rather than performance. (more…)

Investment Risk Tolerance Affected by Age, Economic Climate, MU Study Shows

By Guest PostJanuary 5, 2012Economyasset preservation, client education, counter productive strategy, economic climate, economic outlook, federal reserve board, financial planners, financial risk, investment goals, investors, market fluctuations, pragmatic relationship, risk tolerance, risks, rui yao, steady source of income, stock market, time period, turbulent economy, u.s economy, united states, university of missouri

COLUMBIA, Mo. – As the U.S. economy continues to lag, many investors remain wary about taking risks with the stock market. Now, researchers at the University of Missouri have concluded that this attitude toward investment risk-taking is influenced by the age of the investor and the economic climate of the time period. Rui Yao, an assistant professor of personal financial planning in the College of Human Environmental Sciences at MU, found that willingness to take financial risks, or “risk tolerance,” decreases as investors age.

“Age has a pragmatic relationship with financial risk,” Yao said. “Each additional year of life represents a shortened time horizon for recouping market losses. In addition, individuals approaching or in retirement may shift focus from asset accumulation to asset preservation. These individuals may become relatively more concerned about potential loss of money when they are closer to retirement or no longer have a steady source of income.” (more…)

Shiller Paper Cited As One of the Century’s Top Economic Articles

By Guest PostFebruary 17, 2011Economy100 year history, aer, american economic review, article, b douglas bernheim, behavioral finance paper, book, changes in stock market prices, daniel l mcfadden, dividends, dot com bubble, efficient markets hypothesis, focal point, irrational exuberance, james m poterba, kenneth j arrow, martin s feldstein, modern era, professor of economics, rational expectations, robert j shiller, robert m solow, shiller index, shiller paper, stephen a ross, stock market, stock prices, top 20 articles, yale professor

An article written by Robert J. Shiller, the Arthur M. Okun Professor of Economics, was recently named one of the “top 20” articles in the 100-year history of the American Economic Review (AER), the premier journal in the field of economics.

“Do Stock Prices Move Too Much to Be Justified by Subsequent Changes in Dividends?” was published in the June 1981 edition of the AER and became a focal point of debate and research over the question of whether changes in stock market prices are driven by rational expectations — what’s called the efficient markets hypothesis — or by other forces. (more…)

‘Market Changes Affect Risk Tolerance’

By Guest PostSeptember 28, 2010EconomyEconomy, risk tolerance, rui yao, stock market, u s economy, university of missouri

COLUMBIA, Mo. – As the U.S. economy continues to lag, many investors remain wary about taking risks with the stock market. Now, researchers at MU have concluded that this attitude toward investment risk-taking is more than just a recent trend.

(more…)

Football Saves Spain’s Economy from Decline

By PravdaJuly 17, 20102 commentsEconomy, Sportsabn amro banks, bloomberg, China, dutch, economic downturn, Economy, gold medal, ing, madrid, miguel sebastian, national debt, South Africa, spain, spaniards, spanish national team, stock market, world cup

The victory of the Spaniards over the Dutch in the World Cup will help the economy, experts say.

The euphoria of the victory improves the mood of the population, and the population in a good mood begins to spend more money and shop more frequently.

(more…)

World Market Nervous over BP’s Possible Collapse

By PravdaJuly 12, 20101 commentEconomy, Environmentarab sheikhs, azerbaijan, baku-tbilisi-ceyhan, bp, british ministers, british petroleum, ecological disaster, forties, gazprom, gulf of mexico, ivan tulyakov, libyan investment authority, north sea, oil giant, oil spill, persian gulf, pipeline, russia, shah-deniz, stock market, united arab emirates, ussr

The British Cabinet of Ministers gathered for a special meeting to discuss the future of one of the world’s largest oil companies in the world, British Petroleum, in connection with the liquidation of the consequences of the ecological disaster in the Gulf of Mexico.

(more…)

Tag Archives: stock market

When to Rein in the Stock Market

Stock Market Stereotypes Undervalue Female Directors in The Short-Term

Investment Risk Tolerance Affected by Age, Economic Climate, MU Study Shows

Shiller Paper Cited As One of the Century’s Top Economic Articles

‘Market Changes Affect Risk Tolerance’

Football Saves Spain’s Economy from Decline

World Market Nervous over BP’s Possible Collapse