Stock Market Overreaction and Unnecessary Risk

Authors

Todd M. Yost, Brigham Young University
Dr. Steven Thorley, Brigham Young University

Keywords

stock market, unnecessary risk, stock price, NYSE

College

Marriott School of Management

Department

Management

Abstract

The original hypothesis behind this study was that the stock market would overreact to news events. So when positive news about a specific company develops the stock price would increase more than would be rational. Conversely when the news was negative the price would decrease more than is warranted. To test the hypothesis, I took several trials consisting of the best and worst performers from the New York Stock Exchange (NYSE) and the Nasdaq stock exchange. I then followed the stock prices for several weeks to see if the price adjusts to reflect the real value of the information.

Recommended Citation

Yost, Todd M. and Thorley, Dr. Steven (2014) "Stock Market Overreaction and Unnecessary Risk," Journal of Undergraduate Research: Vol. 2014: Iss. 1, Article 994.
Available at: https://scholarsarchive.byu.edu/jur/vol2014/iss1/994