A Cross Sectional Study of Financial Measures in Predicting Stocks’ Riskiness during Year 2008 Crash Period

UNCP Author/Contributor (non-UNCP co-authors, if there are any, appear on document)
Victor Bahhouth Ph.D., Associate Director of BIS studies and Professor of Finance (Creator)
Dr. Ramin Cooper Maysami, Former Dean/Professor, School of Business (Creator)
The University of North Carolina at Pembroke (UNCP )
Web Site: http://www.uncp.edu/academics/library

Abstract: The study tests the use of financial measures in predicting stocks’ riskiness during 2008 crash period. The stock market witnessed a number of crashes with the most recent one in year 2008. Crashes cause instability in the stock market and a collapse of investor confidence. In a study, Bahhouth and Maysami (2009) showed evidence that Beta had a marginal effect in predicting stocks riskiness. The paper explores the ability of using financial ratios to identify stocks’ riskiness (i.e. stocks that are more adversely affected during the crash periods). Analysts, practitioners and academicians used financial ratios in assessing stock returns in financial markets (Arslan, O. and Karam, M., 2009; Bhandari 1988; Basu 1977; Tze, S., and Bon H., 2009). The results showed that a set of financial measures exhibited significant predictive power in identifying stocks that were adversely affected during the year 2008 crash period.

Additional Information

Academy of Accounting and Financial Studies Journal 15.1 SI
Language: English
Date: 2011
Stock Market, Financial Measures, Financial Ratios, Predicting Stocks’ Riskiness, 2008 Crash Period

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