StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

Survey of European Firms. Financial Management - Essay Example

Cite this document
Summary
However there is a vast amount of: literature that provides evidence to the opposite direction. More specifically, the literature has documented profits for Contrarian and Momentum strategies that have been attributed to investor overreaction and under reaction, respectively.
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER95% of users find it useful
Survey of European Firms. Financial Management
Read Text Preview

Extract of sample "Survey of European Firms. Financial Management"

Download file to see previous pages

Survey of European Firms. Financial Management They go on to elaborate that they two strategies are very connected to each other, thus insinuating that one could not be affected by investors reactions without the other being affected also. There is some evidence to support the fact that profits have nothing to do with investor over (or under) reaction. In light of the massive amounts of evidence that speaks otherwise, I find myself unconvinced that a market that lives a breathes because of the activity of the investors will be unaffected by their whims.

Oumar and Kodjovi (2003) find that there is most certainly a parallel between the stocks that do well and the state of mind possessed by those buying them. They say that someone who has been a recent loser in the stock market will tend to be a bit cautious until they find a new hot investment. Once they come across something that looks promising they will, because of a sense of inflated optimism and hope, buy more than they normally would. Someone who has been a consistent winner, on the other hand, will typically encourage within himself to grow a particular sense of apprehension and reserve.

What are the end results of these two separate mentalities trading together on the market floor A bit of a confusing result to say the least. The market will reflect the optimism and pervasiveness of the investor who knows that he will bounce back. It will also reflect the introverted spending habits of someone who knows that the next big financial disaster is just around the corner. There is another investor whose ability to react rationally and stably (or lack thereof) affects the profits of a stock.

This is the investor who has too much money and not enough sense to put it anywhere wisely. He will buy everything one day and sell it all the next for no apparent reason. Playing for market, for a person like this, is just another form of gambling. I will grant that this breed of investor comes few and far between, thankfully, but they are still out there trading with enough force and determination to effect the profits of others. Works Cited Conrad, J. & Kaul, G. (1993) Long-Term Market Overreaction or Biases in Computed Returns American Finance Association: Journal of Finance 48.

39-63 Kodjovi, A. & Oumar, S. (2003) Profitability of the Short-Run Contrarian Strategy in Canadian Stock Markets. Canadian Journal of Administrative Sciences Lusua, J. & Norden, L. (2005) Momentum and Contrarian Strategies at the Swedish Stock Market. Independent Academic Paper Question 2 Hackbarth, Hennessy, and Leland (2004) noted that the financial institutions in the United States share many consistencies when it comes to the regularities in their capital structure. Graham and Harvey (2001) not only agree with this observation but they further state that one of the large consistencies, or observed regularities, between modern United States corporations is their established predisposition towards a trade-off model as they feel it lends them a certain financial advantage, or an economical prepotency.

Bancell and Mittoo (2004) believe that the observed regularities between companies are not so much a result of companies observing each other, but rather that the legal system has set up certain business models to be more

...Download file to see next pages Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Survey of European Firms. Financial Management Essay”, n.d.)
Retrieved from https://studentshare.org/management/1516982-survey-of-european-firms-financial-management
(Survey of European Firms. Financial Management Essay)
https://studentshare.org/management/1516982-survey-of-european-firms-financial-management.
“Survey of European Firms. Financial Management Essay”, n.d. https://studentshare.org/management/1516982-survey-of-european-firms-financial-management.
  • Cited: 0 times

CHECK THESE SAMPLES OF Survey of European Firms. Financial Management

Analysis of Technological Activities and Their Impact on the Financial Performance of the Firm Article

The examples of secondary data in the study include statistics and literature on management and marketing theory.... Statistics provided rich backgrounds for guiding the study and providing the study with grounds for management theories (Wang and Pizam, 2011, p.... In addition, it strives to give information for proper management decisions as regards different cases.... This means that there could be different scenarios for management as regards the age of firms and invention....
8 Pages (2000 words) Essay

Globalization of World Financial Markets

In the paper “Globalization of world financial markets” the author analyzes benefits and detrimental consequences οf financial liberalizations.... Research finding proving the detrimental effect οf liberalization on the financial system.... This result has been confirmed in a 1999 study by Marco Rossi (IMF working paper WP/99/66) for a sample that includes developing countriesAccording to Wyplosz study, liberalization οf financial markets may be desirable in the long term, but it is risky in the short to medium term, and developing countries should approach this as a delicate step calling for cautious policy reactions, according to a research study for the Group οf 24 on International Monetary Affairs, the developing country grouping at the IMF and the World Bank....
9 Pages (2250 words) Essay

Firms, in Seeking Competitive Advantage, Develop Operations Strategy

The various parts of the operations management have been identified in the literature trying to locate the most effective methods for the improvement of the firms' productivity.... (1989, 181) that 'although much of the assessment and critique is directed at operations strategy, traditional operations management issues such as technology, productivity, and quality also come under scrutiny as to their role in strategy'.... In other words, operations management can be expanded in many organizational sectors influencing the development of the firm's daily activities in accordance with the trends of the market and the customer preferences....
9 Pages (2250 words) Assignment

Information and Communication Technology-Related Developments in Overseas Markets

This paper analyzes how changes and developments in communication and information technology may influence the coordination of firms' worldwide operations.... Primary data set consists of a survey and a questionnaire administered to 40 odd ICT executives and managers at firms with overseas operations.... While responses to the survey would be recorded with much more accuracy and detail, responses to the questionnaire would be sifted and collated to identify significant trends and process orientations in company decisions to adopt ICT in the changing overseas markets....
16 Pages (4000 words) Thesis Proposal

The Financing of Small Businesses in Saudi Arabia

The current study focuses on the examination of all aspects of the financing of small firms in Saudi Arabia.... Moreover, differences have been identified between the measures taken by governments in developed and developing countries regarding the limitation of inequalities in the support offered to entrepreneurs worldwide; the form and the level of governmental support to business activities have been also found to be related with the size of the firm involved – a fact that can offer the chance to foreign firms to enter the market – domestic firms that are already well developed are also likely to increase their power (Keren et al....
14 Pages (3500 words) Essay

Financial and Non Financial Measures of an Organisation

In this context, the balanced scorecard has been found as combining measures in such a way that management has access to key financial and nonfinancial information, while not being inundated with an abundance of information'.... From the paper "financial and Non financial Measures of an Organisation" it is clear that the changes and turbulence that may occur in the internal and external organizational environment can operate as factors of instability for the specific organization....
11 Pages (2750 words) Research Paper

Impact of Globalization of World Financial Markets

This paper "Impact of Globalization of World financial Markets" discusses whether financial liberalization is good or bad we need to analyze arguments given by both opponents and proponents οf financial liberalization.... First, we will consider arguments against financial liberalization.... Portfolio investment encompasses trade in securities like stocks, bonds, bank loans, derivatives, and various forms of οf credit (commercial, financial, guarantees)....
8 Pages (2000 words) Essay

Management of British Petroleum

The paper "management of British Petroleum" highlights that it has been proved that recession can destroy both the less productive and the powerful – in terms of their profitability - firms; the latter can be 'destroyed by the recession during their infancy'.... hellip; One of the most challenging tasks for managers in firms worldwide has been the development of effective plans for facing the financial crisis.... 2006, 201); it seems that it is quite difficult for firms to face a recession especially when they are not appropriately prepared – referring to their structure, their strategic plans and their resources....
7 Pages (1750 words) Research Proposal
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us