Bond and Stock Market Response to Unexpected Earnings Changes
Abstract
Rusanti, Ramadhani Lisa (2006). Bond and Stock Market Response to Unexpected
Earning Changes. Yogyakarta. Management Department. Economic Faculty. Islamic
University ofIndonesia.
Thisresearch is intendedto study and examine whether bondand stock market react
positively (negatively) to increases (decrease) earning changes. By adding bond
rating, market index andcash dividend as the control variable, earning changes may
give the information needed by bond andstockholder. Thus, they use this information
topredict theirfuture returns. The results are significantfor the bondholder returns,
but not for the stockholder's. It shows the evidence that bondholder react positively
(negatively) to the earning changes increase (decrease) and alsofor the bond rating.
But that result does not occur on stockholders. The stockholder's return only react
positively (negatively) to market index and cash dividend increase (decreases). It
does notgive anyreactionfor the earning changes.
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