The deviation of market stock prices from intrinsic values: The Philippine case
The Philippine stock market has grown in recent years. Together with this growth, negative perception on the stock markets due to shocks or stock market manipulation have surfaced and have historically created negative impacts on stock market prices and trading. Hence, the purpose of this study is t...
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| Main Authors: | , , , |
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| Format: | text |
| Language: | English |
| Published: |
Animo Repository
2017
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| Subjects: | |
| Online Access: | https://animorepository.dlsu.edu.ph/etd_bachelors/9049 |
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| Institution: | De La Salle University |
| Language: | English |
| Summary: | The Philippine stock market has grown in recent years. Together with this growth, negative perception on the stock markets due to shocks or stock market manipulation have surfaced and have historically created negative impacts on stock market prices and trading. Hence, the purpose of this study is to see if the intrinsic values derived from the dividends, cash flow, and book value per share reflects the stock price volatility in the market. The researchers hypothesize that there is deviation between the trading price and the intrinsic values of Philippine listed companies. With Stata 13, the researchers used the LSDV1 of the fixed effects model to estimate the intrinsic values of each firm for each year, then used these and market prices to determine deviation. The researchers found that there is high deviation overall given the negative skewness of the divergence rates. Market stock prices thus deviated from their fundamentals. Moreover, the researchers showed that the average divergence rates for the years 2010 to 2011 and 2013 to 2016 are negative, meaning that stocks in the Philippines Stock Exchange for these years are undervalued. |
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