The empirical relationship between accounting disclosure and stock Dissertation

The empirical relationship between accounting disclosure and stock market return using portfolio analysis and managerial behavio - Dissertation Example The rapid advances in technology and communication have provided instant access of news on companies and capital markets to investors through mediums such as the Internet and television (Mayer, 2003). Thus, information is now analyzed by investors in a matter of minutes or seconds and decisions on stock investments are taken much more frequently. Companies disclose information on their performance or other aspects through various mediums such as earnings reports, corporate communications and management interviews (Weston, 2009). The investor base is constantly on the lookout for any new information from such events that may help them increase their returns or reduce their risk exposure (Schillhofer, 2008). Based on these factors, it is believed that an empirical relationship exists between accounting disclosures of firms and the performance of related stocks in the market. The paper analyzes the potential existence of such an empirical relationship among companies within the Gulf Coo peration Council (GCC) region by using a numerical analysis on historical information on related parameters. Schillhofer (2008) has shown that earnings disclosures have a direct influence on investor preferences that determine the prices and returns from traded securities. Since then, numerous studies have been carried out to understand the relationship between corporate disclosures and the performances of securities related to the target firms. While this strong relationship is demonstrated among firms based in the developed and western economies, behavior demonstrating the relationship between accounting disclosures and stock returns is rather sparse and relatively unexplored among firms based in Oman and other countries belongings to the Gulf Cooperation Council (GCC). This paper is an attempt to provide some further investigation into this phenomenon with a specific focus on the firms based out of the GCC member countries. McCahery (2007) believes that research exploring the val ue of information disclosed through annual reports and other corporate disclosures for investment analysis and valuation purposed has been rather limited in nature. This however leads one to question the importance of accounting disclosures and why they are so avidly analyzed by investors. Hirschey (2009) have conducted elaborate surveys of investors and investment analysts and have arrived at a broad consensus over the relevance and importance of the target company’s financial statements, footnotes, Management discussions & analysis (MD & A) as well as the various accounting assumptions and estimates of the company. For example, the release of financial statements and accounts is followed by the annual general meeting (AGM), which in the opinion of Ang (2008) perhaps offers the only opportunity for investors to understand the company’s management, their behavior and their practices to improve the sustainability and prospects of the business. However, Heinrich (2006) c onducted some analytical studies in this regard only to conclude that such meetings did not generally evoke a collective and unilateral reaction from the market. According to Weston (2009), the extent of information available in the market about a company is directly related to the range of disclosures made public by the organization as well as the extent to which the company’s stock is followed by intermediaries such as financial analysts and brokers. Thus, most

Renewable EnergyExplore the United States history of renewable energy, Essay

Renewable EnergyExplore the United States history of renewable energy, where the country stands currently and its future outlook. Examine the problems with re - Essay Example Though there is no shortage of any non-renewable fuel, critics of their use point out that it is logically possible to use up nonrenewable fuels" (Pimental, et.al, 1994, pg. 1). If something does not change, the United States has the potential to encounter serious energy shortages before too long. The purpose of this paper is to explore the United States' history of renewable energy, where the country stands currently, its future outlook, implement current government issues and social issues on the topic, and to examine the problems with renewable energy (National Center for Policy Analysis Idea House, 2008). Water-powered systems have been used for centuries. Today, water power is used mainly to generate electricity. "For many centuries, wind power like water power has provided energy to pump water and run mills and other machines. In rural America windmills have been used to generate electricity since the early 1900s" (Pimental, et.al, 1994, pg. 1). Harvested from forests, biomass energy currently provides the United States with 4.2% of its energy supply. It is used even more prominently in other countries, especially developing countries. The sun's energy is converted into heat through solar thermal energy systems and then is used in houses, in different industrial settings, and to generate electricity. ... current usage of renewable resources is passive heating and cooling of buildings although it is not being used to its full extent as of yet (Pimental, et.al, 1994). Its Future Outlook "The use of solar energy is, however, expected to grow. Renewable energy technologies that have the potential to provide future energy supplies include: biomass systems, hydroelectric systems, hydrogen fuel, wind power, photovoltaics, solar thermal systems, and passive and active heating and cooling systems" (Pimental, et.al, 1994, pg. 1). The use of alternative liquid fuels such as ethanol, methanol, and hydrogen are also likely to pick up in the future (Bruce and Pickering, 2008). The Problems with Renewable Energy Just like non-renewable resources, renewable energy sources have their own conflicts and these are likely to increase along with the increased usage of renewable resources in the future. Some problems that are likely to occur are limited availability of land, limited abilities to harvest forest resources within the United States forcing these resources to be imported, and a growing population (Pimental, et.al, 1994). Social and Political Concerns "The first priority of a sustainable US energy program should be for individuals, communities, and industries to conserve fossil energy resources. Other developed countries have proven that high productivity and a high standard of living can be achieved with considerably less energy expenditure compared to that of the United States. Improved energy efficiency in the United States, other developed nations, and even in developing nations would help both extend the world's fossil energy resources and improve the environment" (Pimentel et al. 1994). Conclusion The purpose of this paper has been to explore the United States'