Analysis of the Relationship between Bond Value and Share Value in the Security Market

摘要

This paper evaluates the bond and share value relationship to provide additional information for investors’ decisions regarding investments in bonds and shares. It used bond and share values from one large advanced economy stock market (Japan) and from one developing economy stock market (Kenya). The paper is pertinent, as little prior research has combined advanced and developing economy stock market in such analysis, which is also scant. Applying a panel data in the OLS regression, it found that in both the advanced and developing economy stock markets, a significant but negative relationship exists between the share values and bond values. This thus provides a practical information for bond and share investors to know when to dive into a particular investment and to the academia for research and academic inquisition. It provides an agenda for further research to expand this analysis by pooling together a number of large advanced economy stock markets and a number of developing economy stock markets to determine the degree at which either values affect each other in advanced and developing economies – such further research would provide more information to international stock speculators.