Test your knowledge on everything from China’s stock market swings to the impact of Trump’s tweets in the IR Magazine quiz edition of IR Papers
Questions:
1. Does the market care about investor protection practices in China?
Yes
No
2. Which two factors are most associated with forward-looking disclosure by Bahrain-listed companies?
Financial leverage
Firm size
Sector
Profitability
Liquidity
3. Who or what is to blame for the extreme swings in China’s stock market?
Institutions
Individuals
4. Do Trump’s tweets affect stocks?
Yes
No
5. On your drive to work you notice a yellow haze enveloping the city – how should you expect your stock to perform that day?
6. Which type of fund is more likely to vote for a dissident in a proxy contest?
Actively managed
Passively managed
7. Which better predicts first-day IPO returns?
Social media buzz
Conventional press news coverage
8. Psychopathic hedge fund managers make for better investors – true or false?
9. Should you disclose a data breach via social media?
Yes
No
10. Does US-style hedge fund activism drive governance change in Japan?
Yes
No
Answers:
1. Yes. Chinese researchers find companies that boost investor protection produce increased buy-and-hold abnormal returns.
2. Financial leverage and firm size, according to researchers at the University of Bahrain.
3. Individuals. A recent study shows institutional investors in China are buying more than individual investors during extreme market swings, particularly on extreme market-down days.
4. Yes and no. At first, firms’ share prices saw huge drops after a Trump tweeting tirade. These days, any losses tend to be ephemeral. Moreover, the US president’s negative commentary may even have a positive long- term effect. One money manager constructed a ‘Drain the swamp’ index of companies Trump has denounced on Twitter. Since its inception before Trump’s inauguration, it has soared 42 percent. And which firms are the biggest winners? Boeing and Amazon.
5. Recent studies in the field of behavioral finance document an inverse relationship between air pollution and stock market returns, particularly – but not exclusively – for oil firms.
6. US researchers say active funds are much more pro-dissident than passive funds.
7. Social media buzz, according to a University of Massachusetts study.
8. False. US investigators say psychopaths underperform. Narcissists also produce lower risk-adjusted returns.
9. It depends. US researchers find that social media disclosure exacerbates the negative stock price’s response to the announcement. But the opposite holds for very low-visibility companies.
10. No. UK scientists find no enduring changes to management effectiveness, decisions and labor management following activist interventions.
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Score (one point for each correct answer) 0-3 There may still be time to chase your dreams of becoming a rock star. 4-7 Your relentless march to mediocrity has succeeded! 8-10 Congratulations. No doubt you also read IR Magazine. |
This article first appeared in the spring 2018 issue of IR Magazine
