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...Oecd economic studies no spring the stock market and investment warren tease contents introduction behaviour of equity prices share a theoretical considerations b empirical evidence i incremental explanatory power ii decomposition returns iii event analysis conclusions bibliography author is senior economist business finance in department reserve bank australia this paper was prepared while he an administrator money division would like to thank paul atkinson john p martin giuseppe nicoletti francis obrien jeffrey shafer hiromichi shirakawa peter sturrn for thoughtful comments on earlier drafl efficient statistical assistance provided by laure meuro secretarial andrea prowse any remaining errors rest with has important role allocation resources both directly as source funds determinant firms value borrowing capacity however growing body raised some doubts about whether markets are sense appropriately reflecting relevant avaiia ble information large swings several countries during s addi...