OVERREACTION HYPOTHESIS: BIST APPLICATION
AŞIRI TEPKİ HİPOTEZİ: BİST UYGULAMASI

Author : Ahmet BAYRAKTAR
Number of pages : 231-246

Abstract

According to the Effective Markets Hypothesis, investors are rational, have full knowledge and are trying to maximize their benefits. According to the hypothesis, prices fully reflect the news, information and expectations in the market. Market participants determine a price by examining all the data, so market prices include current information and expectations. However, contrary to market efficiency assumptions, market prices cannot be determined by rational investors and psychological thoughts play an important role. Investors make mistakes from time to time, and some market participants cannot act rationally. People can overreact to unexpected news or the results of events. The reason for overreaction is suggested by the market not to rationally evaluate the reflected information, but more than it should be. In particular, they are overreacting very good or very bad news, while stock prices are being evaluated by investors in the context of new information. According to the results obtained in this study, international rating agencies have a short-term effect on BIST banking sector stock price and transaction volume indicators.

Keywords

BIST, Efficient Markets Hypothesis, Overreaction Hypothesis

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