THE EFFECT OF FOREIGN PORTFOLIO INVESTMENTS ON THE ISE:

AN INDEX-BASED STUDY

Bekir ELMAS

Abstract

Foreign shares in the market of the developing countries increased to significant levels with the financial globalization. Istanbul Stock Exchange (ISE) is the only stock market of Turkey. It is seen that the foreign investors are generally institutional investors; their shares fluctuate around 65-70% and sometimes exceed over 70 %. Depending on these two factors, it is obvious that the foreign investors have a significant effect on the ISE indexes. This study aims to determine whether a change in the foreign share have an effect on the increases and decreases of the indexes calculated in the ISE and to determine the influence. The foreign share in the ISE and 12 index variables calculated in the ISE were adopted as the data set. Consequently, it was determined that the foreign investor movements were generally not the triggering factor in the increases and decreases in the ISE-100 index and the other indexes; on the contrary, the foreign investor increased or decreased their investments by following the movements (increase/decrease) in the other indexes.

STOCK PRICE REACTIONS TO MERGER ANNOUNCEMENTS:

EVIDENCE FROM ISTANBUL STOCK EXCHANGE (ISE)

Berna KIRKULAK ULUDAĞ
Özlem DEMİRKAPLAN GÜLBUDAK

Abstract

The stock price performances of the ISE listed non-financial firms are examined before and after the merger announcements by employing cumulative average abnormal returns (CAARs) from 1997 to 2006. In Turkey, merger and acquisitions (M&As) intensified in particular after the 2001 financial crisis. Consistent with the previous studies, the findings suggest that the stock prices prior to merger announcements are likely to increase. However, this positive effect disappears following the merger announcements and the post-merger stocks underperform in the long-run. Investors’ sentiment (optimism) explains the post-merger underperformance anomaly. Furthermore, a benchmark of control firms is constructed according to size and growth potential. The findings reveal the fact that bidding firms perform better than non-merged firms in the long-run.

A GAME THEORETIC APPROACH TO MODEL
FINANCIAL MARKETS: GUESSING GAME

Ü. Barış URHAN
Zafer AKIN

Abstract

How deep our reasoning and strategic thinking is and how strategic we think are crucial in making financial investment decisions because we need to guess how other people will behave. This paper studies Guessing Game (Beauty contest game) that helps us understand how people make decisions in environments where depth of reasoning plays a key role. We mainly summarize the findings of experimental studies focusing on this game and then link these findings to financial markets, especially to stock market players’ behavior. We also offer some extensions that may further contribute to produce better and more realistic models of financial markets.