Market Myopia - The Research about Response of Stock Price of R&D Investment Disclosure

This paper investigates the market's response about long-term investment disclosure after separating the stock market before and after Financial crisis and analyse to focus on market myopia. First, we studied the end of the year settlement firm among the manufacturing industry that were made during the period 1993 to 2002 where the firm was listed on KRX. As a result, in market myopia, the hypothesis that R&D announcement happens negative move of stock price is rejected. R&D announcement of stock market is regarded as the positive signal which will produce the increasing of corporate income. Second, We divided the data into two samples by starting from Financial crisis. The first sample consists of the firm during 1993 to 1997, and the second sample consists of the firm during 1998 to 2002. Also we redivided each samples into three samples by own ratio.As a result, market myopia didn't exist before Financial crisis, but it existed after Financial crisis. As mentioned above, Investors don't think that any invest bring high expected cash flow to them because market circumstance is changed and uncertainty increase. Exactly, this implies the occurrence of the Market Myopia.