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Exploring the association between stock price and accounting performance measures for the pivoting company: a case study of Logitech s.a.

by Darrell, Anderson

Abstract

In Anthony, Joseph and Ramesh’s (1992), The Association between Stock Price and Accounting Measures: A Life Cycle Hypothesis, life cycle theory is introduced as an important component in determining the relationship between sales and stock price responsivity. Their analysis determines that there are three generic stages of a company’s life cycle: stagnant, growth and mature, which can be estimated using accounting figures. An understanding of the correlation between a company’s current life cycle, its accounting figures, and the stock price response result in business policy applications that can increase long-term profitability and capital investment. This study explores the possibility of the existence of a fourth generic life cycle stage, a pivot stage, in which a company behaves in an entirely new way—marketing and investing befitting of a growth company, despite a classification as mature in its life span. By failing to account for behavior modifying scenarios, we construct an incomplete picture of the actual circumstance of a company; subsequently, stock price estimations will be less accurate. The case of this study is Logitech, a global PC peripheral manufacturer that has shifted its market focus from PC peripherals to music, tablet, and gaming industries in order to build a more sustainable platform for future growth.

Note

The author has given permission for this work to be deposited in the Digital Archive of Colorado College.

Colorado College Honor Code upheld.

Includes bibliographical references.

Administrative Notes

The author has given permission for this work to be deposited in the Digital Archive of Colorado College.

Colorado College Honor Code upheld.

Copyright
Copyright restrictions apply.
Publisher
Colorado College
PID
coccc:11098
Digital Origin
born digital
Thesis
Senior Thesis -- Colorado College
Thesis Advisor
Johnson, Daniel
Department/Program
Department of Economics and Business
Degree Name
bachelor
Degree Type
B.A.
Degree Grantor
Colorado College
Date Issued
2015-05