INVESTOR SENTIMENT, ACCOUNTING INFORMATION AND STOCK PRICE: EVIDENCE FROM THE VIETNAM STOCK MARKET

Abstract

The purpose of this research is to analyze the effect of investor sentiment and accounting information to stock price based on residual income valuation model of Zhuas and Niu (2016). By the data of the Vietnamese stock market, I use investor sentiment index to review investor sentiment under expected earnings growth and the required rate of return aspect by using fixed effect model. The empirical results show that investor sentiment may change the expected earnings growth and the required rate of return, therefore, it may affect to stock price. However, the sentiment effect during pessimistic period is evidently different from that when sentiment is relatively high, especially for the required rate of return. In addition, accounting information and investor sentiment can both explain the stock price in Vietnamese stock market. Howerver, accounting information is more reliable for stocks with stable earnings, whereas investor sentiment has evident asymmetric effect on stock price.

Keywords: Investor sentiment, accounting information, stock price.