Using fundamental analysis of financial information to explain unexpected market behaviour Online publication date: Thu, 13-Sep-2007
by Daniel R. Brickner, Charles A. Brown, Mark Myring
Global Business and Economics Review (GBER), Vol. 9, No. 4, 2007
Abstract: This paper extends prior research in the areas of fundamental analysis and the information content of losses in an effort to explain unexpected market behaviour in certain circumstances. Specifically, we develop expectations related to the relevance of fundamental financial signals to explain firm returns in cases in which earnings do not serve as an effective summary measure for valuation purposes. In such settings, we posit that market participants seek additional information sources, such as fundamental signals, to assist in firm valuation. Our results indicate that although earnings do not explain returns for firms sustaining losses, fundamental financial signals are value-relevant. Upon segregating our sample further, we find that the fundamental signals are significant in explaining returns for firms in which yearly returns appear to belie the direction of the firms' earnings. Taken together, these results support our expectations regarding the value-relevance of fundamental financial signals in certain settings.
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.Complimentary Subscribers, Editors or Members of the Editorial Board of the Global Business and Economics Review (GBER):
Login with your Inderscience username and password:
Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.
If you still need assistance, please email subs@inderscience.com
Our Blog 
Follow us on Twitter 
Visit us on Facebook