Number preference in Australian stocks

Stock price rallies/declines often terminate at price levels that are interpreted by many as areas of psychological resistance or support, while an alternative interpretation is that they coincide with price clusters. Some of these price levels tend to repeat with a regularity that is inconsistent with mere chance. In this paper, the existence of price clusters and psychological barriers is tested on a sample of 20 Australian stocks. We consider two number sequences, both derived from a base number of 100, as well as integer price levels. It is shown that Australian stock price data are not uniformly distributed and that for the majority of the stocks, price swing highs and lows are associated with certain recurring price levels. Some of the implications for trading and investing are considered.

Do dietary changes of Australasian gannets (Morus serrator) reflect variability in pelagic fish stocks?

The relationship between changes in the diet of Australasian gannets (Morus serrator) and commercial fisheries landings was investigated. The contribution of pilchard (Sardinops sagax) to the diet of gannets was significantly related to the commercial catch of that species, suggesting that changes in the relative proportion of pilchard in the diet of gannets may be a useful index of pilchard abundance and availability. Equivalent relationships, however, were not found for other common prey species in the gannet diet. It is considered that the abundance of important prey items in the gannet diet, such as pilchards, and commercial landings are proportional to stock abundance. The implications of this relationship for fisheries management are examined.

Hot issues, new economy stocks and Australian industry IPO returns in the late 1990s

This paper analyses Australian IPOs at an industry level for the period 1994 to 1999. We find a significant relationship between capital weighted IPO industry returns and contemporaneous index returns suggesting that capital raising and money left on the table arguments matter. We do not find any hot issue years at an industry level. Further at an industry level we find that new economy listings are not different to listings from other sectors of the economy.

Going negative : what to do with negative book equity stocks

A firm's book equity is a measure of the value held by a firm's ordinary shareholders. Increasingly, it is being reported as a negative number. Because a firm's limited liability structure means that shareholders cannot have negative value, negative book equity has no obvious interpretation. Consequently, both practitioners and academics typically omit such stocks in their analysis .While these stocks are small in number, they are disproportionately represented in extreme growth-value sectors and, therefore, can have an impact on applications where value is defined in terms of book equity. The authors propose a new approach that classifies negative book equity stocks across the growth-value spectrum by considering how close their returns correspond to those of stocks that fit more obviously into these classifications .They find that this new value factor, which includes negative book equity stock, is economically and statistically different from the old value factor that excludes such stocks. Although they illustrate how this approach can be used to classify negative book equity stock, the approach is quite general and may be used whenever particular accounting data are unavailable or otherwise suspect.

An analysis of trading in target stocks before successful takeover announcements

In this paper we examine both informed and contraire trading preceding successful takeover announcements on US target firms from 2001 to 2006. We find that both informed trading and contraire trading exist within the period preceding successful takeover announcements on the stock market, as evident through abnormal returns and trading volumes and on the option market by analyzing only abnormal trading volume. In regard to contraire trading, we investigate possible explanations for its existence. This study finds, through analysis of an unbiased sample of rumored target firms, that deliberate contraire trading appears to be profitable which is likely an explanation for such trading.

Predators help protect carbon stocks in blue carbon ecosystems

Predators continue to be harvested unsustainably throughout most of the Earth's ecosystems. Recent research demonstrates that the functional loss of predators could have far-reaching consequences on carbon cycling and, by implication, our ability to ameliorate climate change impacts. Yet the influence of predators on carbon accumulation and preservation in vegetated coastal habitats (that is, salt marshes, seagrass meadows and mangroves) is poorly understood, despite these being some of the Earth's most vulnerable and carbon-rich ecosystems. Here we discuss potential pathways by which trophic downgrading affects carbon capture, accumulation and preservation in vegetated coastal habitats. We identify an urgent need for further research on the influence of predators on carbon cycling in vegetated coastal habitats, and ultimately the role that these systems play in climate change mitigation. There is, however, sufficient evidence to suggest that intact predator populations are critical to maintaining or growing reserves of 'blue carbon' (carbon stored in coastal or marine ecosystems), and policy and management need to be improved to reflect these realities.

Does financial news predict stock returns? New evidence from Islamic and Non-Islamic stocks

The paper extends the time-series financial news data set constructed by Garcia (2013) and uses it to examine whether financial news predicts returns of Islamic stocks differently compared to non-Islamic (conventional) stocks. We find that they do. First, while both positive and negative worded news predict most Islamic and conventional stock returns, positive words have a larger impact on both types of stock returns. Second, shock to returns from financial news reverses only in part for some stocks. Third, for a mean-variance investor, investing in Islamic stocks is relatively more profitable than investing in the corresponding conventional stocks. Fourth, we show that profits are robust to a range of time-series risk factors, namely, market risk, size-based risk, and momentum-induced risk.