Abstract
This paper provides a comprehensive review of the major perspectives of scholars regarding the value premium phenomenon, which has been debated for decades. The review is structured into four parts: risk based explanations, market level explanations, firm level explanations, and behavioral based explanations. Risk based explanations, which revolve around Fama and French's contribution, are discussed alongside two other prominent works by different scholars. Market level explanations mainly focus on aggregate financial conditions, while firm level explanations highlight different forms of financial inflexibility. Behavioral based explanations are subdivided into short term momentum, long term momentum, and irrational expectations. The paper also addresses the issue of the decreasing value premium observed in recent decades, which underscores the proxy problem of using the book to market ratio to reflect the fundamental equity of stocks. Overall, this review sheds light on the various perspectives that scholars have brought to bear on the value premium phenomenon, thereby deepening our understanding of this long standing puzzle in the global markets.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callMore From: Advances in Economics, Management and Political Sciences
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
