Does Stock Market Over-react? Some Findings on Stock Reactions and Operating Performances of Technologically New Products

Although stock markets are assumed to operate efficiently and rationally in terms of reflecting the expectations of investor on a firm's activities and decisions, several studies have documented that investors over-react and under-react to organizational events. In this study, we provided some empirical evidence on the argument on stock market over-reaction by examining the difference between what the stock market revealed and what annual financial statements reported associated with the technologically new product (TNP) introductions in the electronics industry.