What Affects Financial Market Prices: Rational Expectations or Noise Traders
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This paper provides an overview on whether capital market prices are determined by rational fundamentals or by noise traders. The paper serves as both a reinforcement and refutation of a recent review paper by Kothari (2001). In his excellent review on capital market research, Kothari (2001) surveys a vast collection of work that spans over thirty years. This lucid chronology will no doubt find its place among the more influential review studies in the literature. Like all useful survey papers, his article offers sufficient structure for young researchers to become acquainted with the main themes in this literature. At the same time, the paper provides seasoned researchers with a useful reference source on a broad spectrum of market related topics in the disciplines of accounting and finance.
© 2001 Griffith University