Random Walks on the Stock Exchange of Singapore

Article Abstract:

Efficient security markets are well-known in developed countries and are a factor that foreign investors depend on. Information on the efficiency of security markets in less-developed countries is not as well-known. Analysis of the Singapore Stock Exchange reveals a 'weak form' of the hypothesis of efficiency based on the theory of random walks in share prices. The stock prices were tested for normality of the distribution of price changes. Though three of the individual share series showed departures from normality, overall the majority could be defined as normally distributed. Tests of independence were performed by serial correlation and non-parametric runs tests. Changes in share prices were deemed to be independent. Based on knowledge of developed countries' security markets, the market of Singapore is weakly efficient.

Stock-exchange, Stock exchanges, Singapore, Random walks (Mathematics), Random walk theory

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The role of current and non-current accruals in the relation between stock returns and earnings

Article Abstract:

This study examines the role of accruals in the relation between stock returns and earnings for intervals of one to four years. We argue that the roles of current and non-current accruals differ because the former turn over more frequently while the latter include long term timing differences and permanent differences. Accordingly, the roles of both categories of accruals are examined over intervals within and beyond the cycle of current accruals. The results suggest that accruals strengthen the association between stock returns and earnings and that they are more important for shorter intervals. Further, non-current accruals play a dominant role in the relation between stock returns and earnings while the effect of current accruals is negligible for all intervals examined. (Reprinted by permission of the publisher.)

Research, Prices and rates, Stocks, Stock prices, Accrual basis accounting, Earnings per share

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Earnings management of firms subjected to product price controls

Article Abstract:

The earnings management activities of Australian firms were studied in response to product price controls established by the Australian government in the 1970s. Firms subjected to price controls were predicted to adjust their discretionary accounting accruals downward to reduce reported net income and to increase the likelihood of approval of the requested price increase. The results showed that firms that were subjected to greatest scrutiny engaged in significant negative earnings management during the given period.

Management, Australia, Economic aspects, Economic policy, Corporations, Price control, Price regulations

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