Conclusion and Contributions Proceeding E Book 4A Turky

1997 forecasts. Since the SET allows firms to disclose only annual forecasts, firms are less likely to provide stand-alone quarterly forecasts. As for forecast items, this study documents that annual forecasts both stand-alone annual and concurrent annual forecasts are more likely to be revenue forecasts; stand-alone quarterly forecasts are more likely to be earnings forecasts while concurrent quarterly forecasts are more likely to be revenue forecasts. However, overall distribution show that most of management forecast, regardless forecast horizon, are more likely to be revenue forecasts. The reason is because the SET does not permit firms to disclose earnings forecasts. Moreover, this study examines forecast forms forecast firms choose for their forecasts and finds that quarterly revenue and earnings forecasts are more likely to be in the qualitative and semi-numeric forms; annual revenue forecasts are more likely to be point estimates and in semi-numeric form while annual earnings forecasts are more likely to be in the qualitative form. According to the disclosure guidelines mandated by the SET, firms do not provide quarterly forecasts. Compared to annual management forecasts, therefore, quarterly management forecasts, regardless forecast item, are in less precise form. This study also documents that most of earnings forecasts, both quarterly and annual, reveal net income figures. Moreover, this study investigates whether management forecasts of Thai listed firms are informative and documents that absolute cumulative abnormal returns around management forecast dates are significantly positive, suggesting that management forecast disclosures are informative. Results are consistent with prior studies on information content of management forecasts of US firms. Additionally, the information content of management forecast is not affected by industry forecast firms are in, forecast timing, and forecast horizon. The study is the first study that provides empirical evidence on management forecast practices and the usefulness of management forecasts in Thailand. Our results provide contributions to financial analysts and investors, management, and the Stock Exchange of Thailand. 1998 The findings in this study directly contribute to the SET. The empirical evidence on management forecast disclosure practices reveals that firms have many alternatives on forecast characteristics to disclose their forecasts. This is beneficial to the SET in issuing its future policy. Finally, this study provides a contribution to the academic literature, specifically to accounting research in Thailand. The findings in this study present management forecast practices and the informativeness of management forecasts in Thailand and therefore the findings will assist accounting researchers in investigating other aspects of accounting research on management forecast disclosures. References Ajinkya, B., and Gift, ε. ―Corporate εanagers‘ Earnings Forecasts and Symmetrical Adjustments of εarket Expectations.‖ Journal of Accounting Research 22 1984: 425- 444. Anilowski, C., Feng, ε., and Skinner, D. ―Does Earnings Guidance Affect εarket Returns? 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Chen, S. ―εanagerial Guidance of εarket‘s Expectations: Incentives and Effects.‖ Doctoral dissertation, The University of Southern California, 2003. Cox, C. ―Further Evidence on the Representativeness of εanagement Earnings Forecasts.‖ The Accounting Review LX 1985: 692-701. Dorsman, A., Langendijk, H., and Praag, B. ―The Association between Qualitative εanagement Earnings Forecasts and Discretionary Accounting in the Netherlands.‖ The European Journal of Finance 9 2003: 19-40. 1999 Feldman, R., δazer, R., and δivnat, J. ―Earnings Guidance after Regulation FD.‖ The Journal of Investing Winter 2003: 31-40. Freeman, R. ―The Association Between Accounting Earnings And Security Returns For δarge And Small Firms.‖ Journal of Accounting and Economics 9 1987: 195-228. Gramlich, J., and Sorensen, O. ―Voluntary εanagement Earnings Forecasts and Discretionary Accruals: Evidence from Danish IPOs.‖ European Accounting Review 13 2004: 235- 259. Jaggi, B., Chin, C., δin, H., and δee, P. ―Earnings forecast disclosure regulation and earnings management: evidence from Tai wan IPO firms.‖ Review of Quantitative Finance and Accounting 3 2006: 275-299. Han, J., and Wild, J. ―Stock Price Behavior Associated with εanagers‘ Earnings and Revenue Forecasts‖ Journal of Accounting Research 29 1991: 79-95. Hirst, E., Koonce, L., a nd Venkataraman, S. ―εanagement Earnings Forecasts: A Review and Framework.‖ Working Paper, The University of Texas at Austin, β006. Imhoff, E. ―The Representativeness of εanagement Earnings Forecasts.‖ The Accounting Review LIII 1978: 836-850. Jaggi, B. , Chin, C., δin, H., and δee, P. ―Earnings forecast disclosure regulation and earnings management: evidence from Taiwan IPO firms.‖ Review of Quantitative Finance and Accounting 3 2006: 275-299. Jelic, R., and Saadouni, B., and Briston, R. ―The Accuracy of Earnings Forecasts in IPO Prospectus on the Kuala δumpur Stock Exchange.‖ Accounting and Business Research 29 1998: 57-72. Kasznik, R., and δev, B. ―To Warn or Not to Warn: εanagement Disclosure in The Face of An Earnings Surprises.‖ The Accounting Review 70 1995: 113-134. Kato, K., Skinner, D., and Kunimura, ε. ―When Voluntary Disclosure Isn‘t Voluntary: εanagement Forecasts in Japan.‖ Working Paper, Osaka University of Economics, β006. δev, B., and Penman, S. ―Voluntary Forecast Disclosure, Nondisclosure, and Stock Prices.‖ Journal of Accounting Research 28 1990: 49-76. δibby, R., and Tan, H. ―Analysts‘ Reactions to Warnings of Negative Earnings Surprises.‖ Journal of Accounting Research 37 1999: 415-435. εcNichols, ε. ―Evidence of Information Asymmetries from Management Earnings Forecasts and Stock Returns.‖ The Accounting Review 64 1989: 1-27. Nichols, D., and Tsay, J. ―Security Price Reactions to δong-Range Executive Earnings Forecasts.‖ Journal of Accounting Research 17 1979: 140-155. Pat ell, J. ―Corporate Forecasts of Earnings per Share and Stock Price Behavior: Empirical Tests.‖ Journal of Accounting Research 14 1976: 246-276. 2000 Penman, S. ―An Empirical Investigation of the Voluntary Disclosure of Corporate Earnings Forecasts.‖ Journal of Accounting Research 18 1980: 132-160. Pownall, G., and Waymire, G. ―Voluntary Disclosure Credibility and Securities Prices: Evidence from εanagement Earnings Forecasts.‖ Journal of Accounting Research 27 1989: 227- 245. Pownall, G., Wasley, C., and W aymire, G. ―The Stock Price Effects of Alternative of εanagement Earnings Forecasts.‖ The Accounting Review 68 1993: 896-912. Rogers, J., and Stoken, P. ―Credibility of εanagement Forecasts.‖ The Accounting Review 80 2005: 1233-1260. Ruland, W., Tung, S., and George, N. ―Factors Associated with the Disclosure of εanagers‘ Forecasts.‖ The Accounting Review 65 1990: 710-721. Skinner, D. ―Why Firms Voluntarily Disclose Bad News.‖ Journal of Accounting Research 32 1994: 38-60. Supattarakul, S. ―Earnigns Warnings: εarket Reaction and εanagement εotivation.‖ Doctoral dissertation, The University of Texas at Austin, 2003. Supattarakul, S. ―Bad News Warnings – Do Vs. Don‘t?: A Simultaneous Equations εodel with Qualitative and δimited Dependent Variables.‖ Working Paper, Thammasat Business School, Thammasat University, November 2007. The Stock Exchange of Thailand. Disclosure Guidelines for δisted Companies‘ εanagement. Bangkok: The Stock Exchange of Thailand, 2005. Waymire, G. ―Additional Evidence on the Information Content of Management Earnings Forecasts.‖ Journal of Accounting Research 22 1984: 703-718. Waymire, G. ―Earnings Volatility and Voluntary Disclosure.‖ Journal of Accounting Research 23 1985: 268-295. 2001 Table 1 Reconciliation of Sample Data for Descriptive Statistics Management forecasts Forecast Firms Management forecast obtained from NEWSCENTER Database 4,483 287 Less Management forecasts issued more than one disclosure in each quarter 3,115 Total firm-quarters 1,368 Less Missing returns data 98 1,270 Less Missing earnings data 79 1,191 263 2002 Table 2 Sample Descriptive Statistics UE SD_NI SD_RET MV All Firms Mean -10.423 125,783.710 0.879 10,545.020 Std. Deviation 811.839 449,216.437 31.121 43,855.961 Maximum 10,460.747 8,108,700.932 1,152.383 676,933.400 75 16.807 67,622.486 0.030 5,061.920 50 Median 0.136 25,920.618 0.021 1,680.000 25 -20.546 10,677.900 0.014 646.000 Minimum -37,952.118 197.283 0.000 7.790 N 2,663 2,663 2,663 2,663 Forecast Firms Mean 0.294 209,926.254 1.936 18,932.133 Std. Deviation 225.649 636,496.578 46.507 61,586.677 Maximum 5,845.109 8,108,700.932 1,152.383 676,933.400 75 20.888 115,451.363 0.030 10,435.590 50 Median 0.714 38,552.542 0.022 3,206.000 25 -21.544 16,002.498 0.016 1,110.000 Minimum -1,314.783 197.283 0.000 61.300 N 1,191 1,191 1,191 1,191 Non-forecast Firms Mean -13.140 63,147.861 0.023 3,745.151 Std. Deviation 1,171.214 224,401.427 0.015 17,507.702 Maximum 16,350.543 5,079,855.116 0.115 483,923.400 75 13.006 44,934.485 0.030 2,859.805 50 Median -0.729 18,034.518 0.020 1,052.940 25 -20.322 7,926.425 0.013 459.720 Minimum -37,952.118 643.485 0.000 7.790 N 1,472 1,472 1,472 1,472 UE is price-deflated unexpected earnings, SD_RET is the standard deviation of returns, SD_NI is the standard deviation of reported earnings, and MV is market value or market capitalization in million baht. For descriptive purpose, we report statistics on the actual, rather than a log of market capitalization. For the remaining tables, we use a log of market capitalization. 2003 Table 3 Number of Management Forecasts and Number of Forecast Firms Sample Periods: January 2005 – December 2005 and July 2006 – June 2007 Industry No. of management forecast disclosures No. of forecast firms Total firms in the SET of forecast firms Average number of forecast per firm per year Mean Median Mode S.D. Property Construction 1,611 80 28 86 93 10.45 9.25 2.00 6.73 Industrials 806 53 18 77 69 8.50 7.50 1.00 6.49 Professional Services 666 58 20 85 68 6.41 6.00 2.00 4.82 Technology 547 32 11 37 86 9.36 7.75 4.00 6.24 Resources 454 21 7 24 88 12.26 11.50 7.50 5.86 AgroFood 270 26 9 47 55 5.62 2.00 1.00 7.41 Consumer Products 89 12 4 43 28 4.38 4.50 1.00 3.43 Non-Performing Group 40 5 2 20 25 2.90 3.00 3.00 0.74 Total 4,483 287 100 419 68 8.46 7.50 1.00 6.46 2004 Table 4 Frequency of Management Forecast Disclosures Sample Periods: January 2005 – December 2005 and July 2006 – June 2007 No. of management forecast disclosures No. of forecast firms 5 111 39 5-10 74 26 11-15 60 21 16-20 25 9 21-25 11 4 26-30 6 2 Total 287 100 Average times 8.46 2005 Table 5 Timing for Management Forecast Disclosures Sample Periods: January 2005 – December 2005 and July 2006 – June 2007 No. of days Before end of period After end of period Total Quarterly Forecast Annual Forecast Total Quarterly Forecast Annual Forecast Total 0-15 342 111 453 323 80 403 856 16-30 305 97 402 392 109 501 903 31-45 313 103 416 325 95 404 820 46-60 108 72 180 - 52 68 248 61-75 24 55 79 - 1 1 80 76-90 33 76 109 - 1 1 110 91-105 38 97 135 - - - 135 106-120 63 99 162 - - - 162 121-135 51 101 152 - - - 152 136-150 27 52 79 - - - 79 151-165 7 55 62 - - - 62 166-180 7 59 66 - - - 66 180 15 795 810 - - - 810 Total 1,333 1,772 3,105 1,040 338 1,378 4,483 Average days 44.02 169.69 22.98 28.23 2006 Table 6 Management Forecast Horizons and Management Forecast Items Sample Periods: January 2005 – December 2005 and July 2006 – June 2007 Forecast Horizon No. of MF disclosures No. of forecast period Forecast item of quarterly forecast Forecast item of annual forecast Quarter Annual Revenue Earnings Revenue and Earnings Total Revenue Earnings Revenue and Earnings Total Stand-alone quarterly forecast One quarter 359 359 - 107 160 92 359 - - - - Two quarters 58 116 - 41 60 15 116 - - - - Three quarters 5 15 - 7 7 1 15 - - - - Four quarters 1 4 - 1 2 1 4 - - - - Subtotal 1 423 494 - 156 229 109 494 - - - - 32 46 22 Stand-alone annual forecast One year 1,460 - 1,460 - - - - 993 155 312 1,460 Two years 622 - 1,244 - - - - 914 120 210 1,244 Three years 7 - 21 - - - - 18 2 1 21 Subtotal 2 2,089 - 2,725 - - - - 1,925 277 523 2,725 71 10 19 Concurrent quarterly and annual forecast One quarter and one year 1,312 1,312 1,312 653 405 254 1,312 949 97 266 1,312 One quarter and two years 340 340 680 185 100 55 340 475 78 127 680 Two quarters and one year 242 484 242 264 172 48 484 175 14 53 242 Others 77 191 130 132 44 15 191 97 9 24 130 Subtotal 3 1,971 2,327 2,364 1,234 721 372 2,327 1,696 198 470 2,364 53 31 16 71 9 20 Total 1+ 2 + 3 4,483 2,821 5,089 1,390 950 481 2,821 3,621 475 993 5,089 49 34 17 71 9 20 2007 Table 7 Forecast Forms of Management Revenue and Earnings Forecasts Sample Periods: January 2005 – December 2005 and July 2006 – June 2007 Panel A: Revenue Forecast Forecast Horizon Quantitative Qualitative Sales Volume Total Point Range Open- ended Semi- numeric Total Quarterly forecast 170 9 39 2 58 3 741 40 1,008 54 818 44 45 2 1,871 a 100 Annual forecast 1,971 43 420 9 342 7 1,090 24 3,823 83 704 15 87 2 4,614 b 100 Total 2,141 33 459 7 400 6 1,831 28 4,831 74 1,522 24 132 2 6,485 100 a 1,871 quarterly revenue forecasts consist of 1,390 forecasts which are provided only quarterly revenue forecasts and 481 forecasts which are provided both quarterly revenue and earnings forecasts. Both figures are presented at bottom line in Table 6. b 4,614 annual revenue forecasts consist of 3,621 forecasts which are provided only annual revenue forecasts and 993 forecasts which are provided both annual revenue and earnings forecasts. Both figures are presented at bottom line in Table 6. 2008 Table 7 Continued Forecast Forms of Management Revenue and Earnings Forecasts Sample Periods: January 2005 – December 2005 and July 2006 – June 2007 Panel B.1: Earnings Forecast Forecast Horizon Quantitative Qualitative Total Point Range Open- ended Semi- numeric Total Quarterly forecast 28 2 14 1 11 1 467 33 520 36 911 64 1,431 c 100 Annual forecast 317 22 140 10 78 12 287 20 822 56 646 44 1,468 d 100 Total 345 12 154 5 89 3 754 26 1,342 46 1,557 54 2,899 100 Panel B.2: Earnings Forecast Forecast Horizon NI NI GM GM EBITDA EBITDA Total Quarterly forecast 1,372 96 13 1 2 0.5 39 2 5 0.5 - 1,431 c 100 Annual forecast 966 66 111 7 5 0.5 356 24 28 2 2 0.5 1,468 d 100 Total 2,338 81 124 4 7 0.5 395 13 33 1 2 0.5 2,899 100 c 1,431 quarterly earnings forecasts consist of 950 forecasts which are provided only quarterly earnings forecasts and 481 forecasts which are provided both quarterly earnings and revenue forecasts. Both figures are presented at bottom line in Table 6. d 1,468 annual earnings forecasts consist of 475 forecast which are provided only annual earnings forecasts and 993 forecasts which are provided both annual earnings and revenue forecasts. Both figures are presented at bottom line in Table 6. 2009 Table 8 Reconciliation of Sample Data for Test of Information Content Management forecasts Firms Management forecast obtained from NEWSCENTER Database 4,483 287 Less Observations which have other events within 14 days surrounding management forecast date 2,028 2,455 266 Less Missing DataStream daily returns 91 Final Sample 2,364 260 2010 Table 9 Market Reaction to Management Forecast Disclosure Distribution of MF Disclosures No. of ACAR a Disclosures -1,+1 -2,+2 -3,+3 Total Sample 2,364 0.043 0.056 0.064 Industry Agro Food 145 0.027 0.036 0.042 Consumer Products 45 0.027 0.040 0.051 Industrials 429 0.033 0.052 0.059 Property Construction 871 0.064 0.071 0.083 Resources 225 0.027 0.035 0.039 Professional Services 364 0.030 0.052 0.058 Technology 285 0.032 0.047 0.053 Total 2,364 Forecast Timing b Before End of Period 1,636 0.035 0.043 0.053 After End of Period 728 0.061 0.084 0.087 Total 2,364 Forecast Horizon c Stand-alone Quarterly Forecast 225 0.030 0.036 0.048 Stand-alone Annual Forecast 1,054 0.038 0.052 0.061 Concurrent Annual-Quarter Forecast 1,085 0.050 0.064 0.070 Total 2,364 Statistically significant at two-tailed 0.01 level. a Absolute Cumulative Abnormal Returns ACAR is computed by compounding abnormal returns on selected windows and then taking the absolute term on cumulative abnormal returns. b We classify forecast timing into two groups. The first group consists of management forecasts which are provided before end of accounting period while the second group consists of management forecasts which are provided after end of accounting period. c We classify forecast horizon into three groups. The first group consists of management forecast disclosures which are provided stand-alone quarterly forecasts. The second group consists of management forecast disclosures which are provided stand-alone annual forecasts. The final group consists of management forecast disclosures which are concurrently provided both quarterly and annual forecasts. 2011 IS AN EVENT RESPONDED BY INVESTORS AS A NON-EVENT? INQUISITIVE EVIDENCES WHEN DIFFERENTIATED BETWEEN FOREIGN AND DOMESTIC INVES TORS’ REACTIONS Bambang Riyanto LS Sumiyana Universitas Gadjah Mada Abstract This research investigates that merger and acquisition MA announcements are able to stimulate abnormal return, rank of excess return and abnormal trading volume. Based on efficient market hypothesis and microstructure theory, it is predicted that price or return and trading volume will react to the MA announcements. In this study, the market reactions are further examined for each type of investors: domestic and foreign. More specifically, the price movements of each of these two types of investors are analyzed thoroughly to explore if domestic investors have superior access to information than the foreign investors. This study finds that market do not react to the MA announcement. It means that MA news does not lead to positive abnormal return, rank of excess return and abnormal trading volume. This may suggest that MA announcement has no information contents. Consequently, it also has no value relevance. It is argued that MA announcements may have been fully anticipated by investors before it is made public announced. Therefore, this study suggests that an information leakage exists in It is further argued that information leakage exists in Indonesia Stock Exchange IDX whenever MA news announced. Finally, this study concludes that the information leakages are dominantly carried out by domestic investors as actors of insider trading. Keywords: event study, domestic and foreign investors, abnormal return, rank of excess return, abnormal trading volume, information leakage, information contents, value relevance, insider trading JEL Classification: G-11, G-14, M-41 2012

1. Introduction Objective and Motivation of the Paper

This study attempts to examine the extent to which investors react to the news issued by firms in the Indonesian Capital Market. It is argued that the market may not perceive news issued by companies has information content. Fama 1978, 1991 argues that if investors believe that the news issued by firms conveys new information, then stock prices should immediately adjust to the new information. Alternatively, the market may not react to the news issued by firms. The debate about whether or not investors react to new information issued by companies is still going on; and the empirical evidence does not conclusively support the thesis that investors react to the new information, especially when the investors are classified as domestic and international. As Dvorak 2005 argues, foreignor domestic investors tend to destabilize the market to exploit short-run returns. It is posited in this study that stock prices will not adjust to new information issued by companies. Investors do not consider such information reflects important events for three main reasons. First, the market is not efficient i.e., efficient in the weak form which suggests that stock prices are not associated with firms‘ values Bhattacharya et al., β000. Second, there is a possibility that the new information does not stimulate investors to react. Third, even if the market is efficient, the new information may have been anticipated by the market long before it is announced Huberman Schwert, 1985. To test the hypotheses, this study uses market volatility, volume of trade, and bid-ask spread to capture the market reactions. The sample is taken from Indonesia Stock Exchange IDX. As an emerging capital market, foreign investors may not expect to generate substantial returns from the Indonesian Stock Exchange. This is because foreign investors develop their portfolio in integrated Bhattacharya, et al., 2000. Furthermore, in emerging markets, there may be unequal access of information among investors: domestic investors have superior access of information than foreign investors, which then drives the price changes. To examine this differential access of information, we use intraday data to identify whether investors are domestic or foreign. This is is because records about foreign and domestic investors are not systematically available at the IDX. The type of firm-specific announcements investigated in this study is MA announcements. Examining price changes associated with type of announcements instead of only one firm- specific announcement allow us to expand the sample and detect variety of announcements Skinner Sloan, 2002; Lopez Rees, 2001. In other words, the findings will be robust across types of announcements. It also allows us to make inference about the characteristics of an emerging market, the Indonesia Stock Exchange, specifically about the extent to which foreign investors perceive that it offers less attractive returns than matured markets. To do this, we compare the market reactions of domestic investors. This comparison also enables us to test whether domestic investors over-react to announcements which will be reflected in the increase in the volatility of returns. This study contributes to the literature in two ways. First, it examines the market reactions in terms of abnormal returns, volatility of returns, and bid-ask spreads. Second, it provides empirical evidence about the extent to which domestic investors possess superior access to information relative to its foreign counterpart. This superiority enable them to react faster capitalize on the opportunity, and make a fortune at the expense of the foreign investors. In other words, domestic inverstors are more knowledgeable with alternative information sources and channels in IDX than foreign investors; they are able to get new information before it is officially released by companies, which enables them to react to the information earlier than the foreign investors. To some extent, the action of the domestic investors may be considered as 2013 ‗insider-trading.‘ The early response of the domestic investors will be followed by all of the investors in the next period. This suggests that the event date or event window does not capture the market reactions properly. The remaining of this study is organized in following order; Section 2 discusses the literature study and hypotheses development. Section 3 discusses the research methods used to examine all hypotheses. Section 4 discusses the research results and findings. The last Section 5 discusses the conclusion derived from analysis results and research findings.

2. Literature Study and Hypotheses Development Announcements and Return

According to Foster 1986, there are three factors that determine if announcements have information content. First, the expectation of the market about the content of the information and the timing of the announcement. One of the important factors that determines the expectation of the market is the availability of competing sources of information. Investors are very uncertain about the content and timing of any information issued by companies. The higher the uncertainty, the more likely the prices of stocks will be adjusted. Second, the effect of the new information issued on the distribution of return in the future. The higher the expected revision of the firms‘ cash flows, the largers will be the revaluation of the stock prices associated with the new information. Third, the credibility of the information sources. The more credible the sources, the larger will be the revision of the stock prices. Dontoh Ronen 1993 define information content in terms of reaction on volume, prices, and expected belief dispersion, decrease in the dispersion on the individuals‘ conclusions about public disclosures, and increase in accuracy or precision of disclosures. This definition is supported by Pritami Singal 2001 who argue that announcement of new information is associated with larger abnormal returns. When the information is consistent with the analysts‘ recommendation, the abnormal returns during 20 days is 3 to 4 larger for positive events, and -2.25 for negative events. Ball Brown 1968 examined the influence of the change of information content of earnings to investors‘ behavior at the New York Stock Exchange using a sample of β61 companies during 1946-1966. The investors‘ behavior is approximated by the level of the stock abnormal return. The investors‘ behavior is classified as positive change positive news and negative change bad news. The results of their research show that there are close correlations between earnings change and cash flow with abnormal return. The companies with earnings increase decrease are followed by the stock price increase decrease. After the annual financial statement published, the stock price index returns to flat from the zero month until the sixth month, that means the stock price has completely reacted against the whole earnings information, so that it is no longer reliable as a prosperous trading basics. This research is succeeded to discover evidences that there is a strong relationship between the earnings announcements and the stock market reaction. Beaver 1968 examined the effect of earnings announcements on the volume of trading and the stock price movement using a sample of 143 companies during 1961-1965. It is found that earnings announcements are associated with trading volumes. Based on the findings, Beaver concludes that: 1 the investors sell or buy stock to optimize the earnings incomes and earnings expenses trade-off; 2 the investors buy or sell stock to maintain on a porftolio basis; 3 the investors buy or sell because a there are changes in their portofolio risk, or b the companies are within their prefered risk; 4 the investors buy or sell to minimize their taxes; 5 the investors buy or sell because there is new information that make them revise their judgement