I was working on a research, where I mainly willing to find the relationship between Corporate Governance, Earnings quality and Stock Prices. I was highly confused of measuring the share price at the end of the year? or is it better to think of the price at stock market the next day of quarterly reports are released? If so whether taking the changes will be better measurement? What are the problems can be there in taking the raw stock prices? Please help me
Dear Yamuna Sivaperumaan ,
If I understood you right you want to compare (I am not sure which aspects of) corporate governance, earnings and stock price. I'm also assuming that you are working with an annual data... if so then
1. EASIEST and APPROXIMATE method to measure the annual stock price is to take an average closing price for the year (sum of all closing prices divided by the number of trading days)
2. little bit HARDER but EXACT method to measure the annual stock price is to take the exponential or weighted average of the stock price in relation to the market capitalization. If you want to do a weighted average then you should take the weight of each trading day versus the market capitalization and get (a very precise) end of the year average stock price.
I hope I helped you with my comments.
kind regards,
Yamuna Sivaperumaan
One way to understand the problem is by way of analogy with a treadmill whose speed represents the expectations of future performance implicit in a company’s share price.
Can you a bit more specific about your question? stock price = share price? Which country?
With my experience working in SW Development Projects of Stock Exchange Platforms& Trading related solutions for Stock Brokerages, when analyzing the Market Data you won't find any difference/specific patterns by grouping it as monthly or annual performance of a Stock Price.
It's a continuous feed. So I would highly recommend you to check and analyze day-to-day Market Data (use the EoD data), excluding non-trading days. You can can easily obtain the MD Level-1 info online, soon after the Trading is closed for the day. What makes the actual effect in a particular day's or week's Share Price of a stock is a release of an important Content Data such as a CA.
Jan Jansen I am from Sri Lanka, Share price means stock price.
I feel that taking the share price on the day of annual report release won't give much effect on investors' decision, why they have already reacted in the market for the quarterly report, so i got some suggestion from my colleagues, saying that, take the share price the previous and next day of quarterly report release and take the difference where i can state that the investors react on report information, which should be good in quality.
The best way is to apply all cases to the views program and take the best estimate of the relationship between the variables