Survey of European Firms. Financial Management Essay

Survey of European Firms. Financial Management - Essay exemplarSurvey of European Firms. Financial Management They go on to elaborate that they 2 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 project 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 at that place is most certainly a parallel between the stocks that do well and the state of mind possessed by those buy 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, becau se of a good 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 invent 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 almost 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 somebody like this, is just another form of ga mbling. 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 CitedConrad, J. & Kaul, G. (1993) Long-Term Market Overreaction or Biases in Computed Returns American Finance Association daybook of Finance 48. 39-63Kodjovi, A. & Oumar, S. (2003) Profitability of the Short-Run Contrarian Strategy in Canadian Stock Markets. Canadian Journal of Administrative SciencesLusua, J. & Norden, L. (2005) Momentum and Contrarian Strategies at the Swedish Stock Market. unconditional Academic PaperQuestion 2Hackbarth, 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 lonesome(prenominal) agree with this observation but they further state that one of the large consistencies, or observed regularities, between mo dern 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