Gangnam Style’ a case of irrational investment: U.S. media
“Gangnam Style,” the K-pop track that launched a
thousand parodies and flash mobs, is drawing attention once more /
this time by potentially subverting the efficient market hypothesis,
according to the U.S. public broadcaster PBS.
The energetic tune by Psy, which went viral in 2012, was the basis of Korean
economist Andy Kim’s paper at the American Economic
Association conference in January.
In the paper, Kim challenged Nobel Prize Laureate Eugene
Fama’s argument that stock prices reflect fundamental value,
citing Psy as an intriguing case in which investors make irrational decisions.
The Sungkyunkwan University professor said the share price of the Korean semiconductor firm DI Corp. skyrocketed by as much as 800 percent shortly
after Psy’s “Gangnam Style” shot to meteoric success across the globe in 2012.
“There was only one even remotely relevant bit of information (to account for this).
The company’s executive chairman Park Won-ho is the father of Park Jae-sang,
a.k.a. tongue-in-cheek rap star Psy,”
said Kim at the meeting held in Boston last month.
DI Corp., which did not form any mergers or capitalize on the
father-son relationship, saw stock prices spike again upon the release of
Psy’s follow-up track “Gentleman” in April 2013 and
subsequent media appearances.
Notably, top-notch hedge fund Dimensional Fund Advisors,
which adheres firmly to Fama’s efficient market hypothesis that stock prices
reflect true value, became the largest shareholder in DI Corp.
following the breakthrough success of “Gangnam Style.”
“That’s an immense effect. That has got to be a true bubble /
as we call it, irrationality,” said Daniel Hamermesh,
professor at Royal Holloway University.
In the same paper,
Kim claimed that other irrational factors, such as CEOs’ attractiveness,
play an instrumental role in the changes in stock prices, at least in the short term.
souce by : http://khnews.kheraldm.com/view.php?ud=20150210000859&md=20150211090533_BL&kr=1