The purpose of this thesis is to examine whether an abnormal return could be earned from the investment strategy using forecasted financial ratios by analysts and to document precisely the response of stock prices to earnings announcements.
As the empirical results of this study, the investment strategy using the analysts forecasted financial ratios did not yield the significant abnormal performance in the stock return from -14 to +14 and the abnormal performance was also not significantly affected by a certain phase of the stock market in Korea. In addition, the investment strategy using more than one ratio showed better performance in comparison with the investment strategy using only one ratio.
