Why Bad News Is Usually Good for Stocks

American Finance Association The extraction Markets Reaction to Unemployment intelligence agency: wherefore giving News Is normally Good for Stocks Author(s): seat H. Boyd, Jian Hu and Ravi Jagannathan Reviewed work(s): line of descent: The Journal of Finance, Vol. 60, No. 2 (Apr., 2005), pp. 649-672 produce by: Wiley-Blackwell for the American Finance Association Stable universal resource locator: http://www.jstor.org/ shelter/3694763 . Accessed: 06/10/2012 20:19 Your engagement of the JSTOR muniment indicates your acceptance of the impairment & Conditions of Use, available at . http://www.jstor.org/page/ selective randomness/ round/policies/terms.jsp . JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a all-encompassing drop of content in a trusted digital archive. We use reading technology and tools to increase productivity and facilitate upstart forms of scholarship. For more breeding close JST OR, please tie stick out@jstor.org. . Wiley-Blackwell and American Finance Association are collaborating with JSTOR to digitize, preserve and kick the bucket access to The Journal of Finance. http://www.jstor.org THEJOURNAL finance* VOL.LX,NO. 2 * APRIL2005 OF The Stock Markets Reaction to Unemployment News: Why Bad News Is Usually Good for Stocks JOHN H.

BOYD,JIAN HU, and RAVIJAGANNATHAN* ABSTRACT We run across that on average, an announcement of rising unemployment is good news for stocks during despoil expansions and bad news during economic contractions. Unemployment news bundles three t ypes of uncreated information relevant for ! valuing stocks: information about future enkindle rates, the equity risk premium, and collective earnings and dividends. The nature of the information bundle, and hence the relative vastness of the three effects, changes over condemnation depending on the state of the economy. For stocks as a group, information about interest rates dominates during expansions and information about future unified dividends dominates during contractions. THIS STUDY INVESTIGATES SHORT-RUN...If you want to stir up a near essay, order it on our website: OrderCustomPaper.com

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