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Rational vs. irational in investors’ behavior in response to financial reporting – empirical evidence on Bucharest stock exchange

Author

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  • Ioan Ovidiu SPĂTĂCEAN

    (Faculty of Economics and Law, Finance and Accounting Department, University of Medicine, Pharmacy, Sciences and Technology from Târgu Mureș, Gh. Marinescu street, no. 38, Tîrgu – Mureș, 540139, România)

  • Cornel Ștefan NICOLA

Abstract

This study is addressing the issue of investors’ behavior as a reaction to financial reporting, measured by the volatility of stock prices. The main research objective relates to assessing the rationale of investors’ behavior when good or bad news are communicated via preliminary and audited financial statements. The research was conducted on a sample of 24 BSE listed companies, from the BET XT index, over the reporting periods between 2012 and 2017. Based on our research we concluded that the Romanian capital market is close to a semi-efficient type of market, since only a half of the observations revealed rationality in investors’ decision making.

Suggested Citation

  • Ioan Ovidiu SPĂTĂCEAN & Cornel Ștefan NICOLA, 2018. "Rational vs. irational in investors’ behavior in response to financial reporting – empirical evidence on Bucharest stock exchange," Acta Marisiensis. Series Oeconomica, "George Emil Palade" University of Medicine, Pharmacy, Sciences and Technology of Târgu-Mureș, România - Faculty of Economics and Law, vol. 1, pages 58-72, December.
    • Handle: RePEc:pmu:oecono:v:1:y:2018:p:58-72
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    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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