Survey Evidence on the Rationality of Business Expectations: Implications from the Malaysian Agricultural Sector
The rational expectations hypothesis (REH) serves as an appealing mechanism in forming expectations compared to that of extrapolative or adaptive frameworks because of its consistency with the basic principles of maximizing behavior. This argument is particularly true as the basic idea of REH mainta...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English |
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Universiti Malaysia Sarawak, (UNIMAS)
2012
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| Online Access: | http://ir.unimas.my/id/eprint/3239/ http://ir.unimas.my/id/eprint/3239/1/Survey%20evidence.pdf |
| _version_ | 1848835168641482752 |
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| author | Wong, Shirly Siew-Ling Puah, Chin-Hong Shazali, Abu Mansor |
| author_facet | Wong, Shirly Siew-Ling Puah, Chin-Hong Shazali, Abu Mansor |
| author_sort | Wong, Shirly Siew-Ling |
| building | UNIMAS Institutional Repository |
| collection | Online Access |
| description | The rational expectations hypothesis (REH) serves as an appealing mechanism in forming expectations compared to that of extrapolative or adaptive frameworks because of its consistency with the basic principles of maximizing behavior. This argument is particularly true as the basic idea of REH maintains that expectations in an uncertain world are formed under assumptions where no systematic errors and information are fully utilized. However, empirical findings from the present study showed diverse evidence of rationality in business operational forecasts formed by Malaysian agriculture firms, as capital expenditure expectations were found to be irrational but gross revenue expectations were supportive of the REH proposition. This implies that the survey of business forecasts may not work well in reflecting the true business outlook, specifically in value-related operational forecasts, which in turn would directly influence investment decisions as well as the capital budgeting process. |
| first_indexed | 2025-11-15T06:03:35Z |
| format | Working Paper |
| id | unimas-3239 |
| institution | Universiti Malaysia Sarawak |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-15T06:03:35Z |
| publishDate | 2012 |
| publisher | Universiti Malaysia Sarawak, (UNIMAS) |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | unimas-32392022-01-13T06:19:40Z http://ir.unimas.my/id/eprint/3239/ Survey Evidence on the Rationality of Business Expectations: Implications from the Malaysian Agricultural Sector Wong, Shirly Siew-Ling Puah, Chin-Hong Shazali, Abu Mansor HB Economic Theory S Agriculture (General) The rational expectations hypothesis (REH) serves as an appealing mechanism in forming expectations compared to that of extrapolative or adaptive frameworks because of its consistency with the basic principles of maximizing behavior. This argument is particularly true as the basic idea of REH maintains that expectations in an uncertain world are formed under assumptions where no systematic errors and information are fully utilized. However, empirical findings from the present study showed diverse evidence of rationality in business operational forecasts formed by Malaysian agriculture firms, as capital expenditure expectations were found to be irrational but gross revenue expectations were supportive of the REH proposition. This implies that the survey of business forecasts may not work well in reflecting the true business outlook, specifically in value-related operational forecasts, which in turn would directly influence investment decisions as well as the capital budgeting process. Universiti Malaysia Sarawak, (UNIMAS) 2012 Working Paper NonPeerReviewed text en http://ir.unimas.my/id/eprint/3239/1/Survey%20evidence.pdf Wong, Shirly Siew-Ling and Puah, Chin-Hong and Shazali, Abu Mansor (2012) Survey Evidence on the Rationality of Business Expectations: Implications from the Malaysian Agricultural Sector. [Working Paper] |
| spellingShingle | HB Economic Theory S Agriculture (General) Wong, Shirly Siew-Ling Puah, Chin-Hong Shazali, Abu Mansor Survey Evidence on the Rationality of Business Expectations: Implications from the Malaysian Agricultural Sector |
| title | Survey Evidence on the Rationality of Business Expectations: Implications from the Malaysian Agricultural Sector |
| title_full | Survey Evidence on the Rationality of Business Expectations: Implications from the Malaysian Agricultural Sector |
| title_fullStr | Survey Evidence on the Rationality of Business Expectations: Implications from the Malaysian Agricultural Sector |
| title_full_unstemmed | Survey Evidence on the Rationality of Business Expectations: Implications from the Malaysian Agricultural Sector |
| title_short | Survey Evidence on the Rationality of Business Expectations: Implications from the Malaysian Agricultural Sector |
| title_sort | survey evidence on the rationality of business expectations: implications from the malaysian agricultural sector |
| topic | HB Economic Theory S Agriculture (General) |
| url | http://ir.unimas.my/id/eprint/3239/ http://ir.unimas.my/id/eprint/3239/1/Survey%20evidence.pdf |