Rational Expectations, Irrational Exuberance: Linkage between U.S. Investors and Pacific-Basin Stock Returns

Rational Expectations, Irrational Exuberance: Linkage between U.S. Investors and Pacific-Basin Stock Returns

We shed new light on the relevance of rational expectations and irrational exuberance of U.S. individual and institutional investors on Pacific-Basin stock returns. We find insignificant effects of irrational exuberance and significant effect of rational expectations on Asian markets with varying de...

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Bibliographic Details
Main Author: Rahul Verma
Format: Article
Language:English
Published: Universiti Utara Malaysia 2009-02-01
Series:International Journal of Banking and Finance
Online Access:https://www.scienceopen.com/document?vid=20d1cfef-19a4-44fa-b773-6441bee98670
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spelling doaj-36002e5da3ad442e92b8dab18928f68b2021-06-15T13:16:46ZengUniversiti Utara MalaysiaInternational Journal of Banking and Finance1675-722X2009-02-0110.32890/ijbf2009.6.1.8383Rational Expectations, Irrational Exuberance: Linkage between U.S. Investors and Pacific-Basin Stock ReturnsRahul VermaWe shed new light on the relevance of rational expectations and irrational exuberance of U.S. individual and institutional investors on Pacific-Basin stock returns. We find insignificant effects of irrational exuberance and significant effect of rational expectations on Asian markets with varying degrees of intensity. There are greater responses of Hong Kong, Malaysia, Philippines, and Singapore while weaker linkages with Taiwan, Thailand, and Korea. Overall evidence suggests that rational expectations of institutional investors are transmitted to a greater extent than those of individual investors. These results are consistent with the view that international effects of the U.S. market can be attributed to rational investor sentiments.  https://www.scienceopen.com/document?vid=20d1cfef-19a4-44fa-b773-6441bee98670
collection DOAJ
language English
format Article
sources DOAJ
author Rahul Verma
spellingShingle Rahul Verma
Rational Expectations, Irrational Exuberance: Linkage between U.S. Investors and Pacific-Basin Stock Returns
International Journal of Banking and Finance
author_facet Rahul Verma
author_sort Rahul Verma
title Rational Expectations, Irrational Exuberance: Linkage between U.S. Investors and Pacific-Basin Stock Returns
title_short Rational Expectations, Irrational Exuberance: Linkage between U.S. Investors and Pacific-Basin Stock Returns
title_full Rational Expectations, Irrational Exuberance: Linkage between U.S. Investors and Pacific-Basin Stock Returns
title_fullStr Rational Expectations, Irrational Exuberance: Linkage between U.S. Investors and Pacific-Basin Stock Returns
title_full_unstemmed Rational Expectations, Irrational Exuberance: Linkage between U.S. Investors and Pacific-Basin Stock Returns
title_sort rational expectations, irrational exuberance: linkage between u.s. investors and pacific-basin stock returns
publisher Universiti Utara Malaysia
series International Journal of Banking and Finance
issn 1675-722X
publishDate 2009-02-01
description We shed new light on the relevance of rational expectations and irrational exuberance of U.S. individual and institutional investors on Pacific-Basin stock returns. We find insignificant effects of irrational exuberance and significant effect of rational expectations on Asian markets with varying degrees of intensity. There are greater responses of Hong Kong, Malaysia, Philippines, and Singapore while weaker linkages with Taiwan, Thailand, and Korea. Overall evidence suggests that rational expectations of institutional investors are transmitted to a greater extent than those of individual investors. These results are consistent with the view that international effects of the U.S. market can be attributed to rational investor sentiments.  
url https://www.scienceopen.com/document?vid=20d1cfef-19a4-44fa-b773-6441bee98670
work_keys_str_mv AT rahulverma rationalexpectationsirrationalexuberancelinkagebetweenusinvestorsandpacificbasinstockreturns
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