Abstract
This paper investigates the association between financial analysts' risk perceptions and accounting and market determined risk measures in Hong Kong. Analyses from a survey of risk perceptions among analysts reveal that: (1) Accounting determined risk measures, together with a contextual variable, explain 0.77 of the variation in perceptions. The statistic is comparable to those reported for the US and UK stock markets. (2) Analysts perceive higher risk in companies expected to exhibit a decline in earnings. (3) Correlation between perceptions and p‐e ratios is ‐0.74. (4) Correlation between market beta and p‐e ratios/perceptions is not significant. The results suggest that earnings expectations play a substantial role in the formation of risk perceptions and that risk perceptions may be a superior surrogate for ex ante market risk than beta. Implications for stock valuation in medium‐sized markets are discussed. Copyright © 1995, Wiley Blackwell. All rights reserved
| Original language | English |
|---|---|
| Pages (from-to) | 207-229 |
| Journal | Journal of International Financial Management & Accounting |
| Volume | 6 |
| Issue number | 3 |
| DOIs | |
| Publication status | Published - Dec 1995 |
| Externally published | Yes |
Bibliographical note
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