Financial Statement and Ratio Analysis: A Classroom Perspective
25 Pages Posted: 15 Aug 2018
Date Written: July 31, 2018
Earnings yield theory argues that current stock prices reflect the present value of all expected future payouts. Ultimate aim of a company is to generate income. Items in financial statements therefore show, among others, how likely is it for a company to turn a positive income. Investors pay close attention to any changes in financial statements and reflect these changes in stock prices. This study provides a summary of the theory about investor reaction to changes in financial statements. The main aim of this study is to provide the theory and its application with a classroom approach with current and actual data. A software command is provided to download and to process the relevant data.
Keywords: Financial statements, financial accounting, stock returns, investor reaction
JEL Classification: M41, G00
Suggested Citation: Suggested Citation