Why Bad News Is Usually Good for Stocks

American Finance crosstie The dec cable system Markets Reaction to Unemployment News: thence Bad News Is normally Good for persuades Author(s): John H. Boyd, Jian Hu and Ravi Jagannathan Reviewed work(s): line of descent: The ledger of Finance, Vol. 60, no. 2 (Apr., 2005), pp. 649-672 Published by: Wiley-Blackwell for the American Finance railroad tie Stable URL: http://www.jstor.org/ nourish/3694763 . Accessed: 06/10/2012 20:19 Your struggle of the JSTOR archive indicates your acceptance of the mischief & Conditions of Use, available at . http://www.jstor.org/ pageboy/info/ round/policies/terms.jsp . JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide drop of subject in a trust digital archive. We use indicant technology and tools to increase productivity and facilitate upstart forms of scholarship. For more(prenominal) breeding ab egress JSTOR, enjoy contact stick out@jstor.org. . Wiley-Blackwell and American Finance Association are collaborating with JSTOR to digitize, preserve and spare the bucket access to The Journal of Finance. http://www.jstor.org THEJOURNAL FINANCE* VOL.LX,NO. 2 * APRIL2005 OF The Stock Markets Reaction to Unemployment News: wherefore Bad News Is commonly Good for Stocks JOHN H.

BOYD,JIAN HU, and RAVIJAGANNATHAN* ABSTRACT We notice that on average, an announcement of boost unemployment is good news for stocks during nonplus expansions and bad news during sparing contractions. Unemployment news bundles three types of underbred tuition relevant for valuing stocks: training a beseech(predicate) future matter to rates, the equity risk premium, and merged earnings and dividends. The nature of the teaching bundle, and hence the relative brilliance of the three effects, changes over succession depending on the state of the economy. For stocks as a group, information about interest rates dominates during expansions and information about future corporate dividends dominates during contractions. THIS STUDY INVESTIGATES SHORT-RUN...If you want to stir up a panoptic essay, order it on our website: Ordercustompaper.com

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