Research Paper
Article citation: Dhasmana, S., & Goel, S. (2023). The insidious hyperreality in financial markets: An integrative review with evidence from the Indian financial market. International Review of Financial Analysis, 102922.
Abstract
Purpose
The commercialized corporate ownerships, which are being traded at mounting market values, convey an impression that they represent the respective companies and their growth. But unfortunately, these market figures in reality do not represent the true value. Based on the concept of hyperreality as given by Baudrillard, this article examines the ontological status of behaviour of financial markets to the information reported in financial reports and tests out the existence of hyperreality manifestation, particularly in Indian securities market with its uniqueness. It establishes that the market prices are unsubstantiated universally and don't have anything to do with the real value of their representative companies, and therefore need to be rationalized before investment decision-making.
Design/Methodology/Approach
It applies an “integrative review” approach for examining Baudrillard's hyperreality impact of sign-referent relationship in financial markets and tests it in the “Indian financial market.” In the process, it uses descriptive analysis and sketches out the corresponding changes in the underlying financial markets' response in India that overrule the accounting signs of book value as real value.
Findings
The paper offers real reflections on the ramifications of accounting for Baudrillard's hyperreality approach. Tightening the academic-practitioner gap, the research solidifies the claim in calling the markets hyperreal not only in west but in India as well. It recognizes hyperreality as the necessity to be acknowledged, accepted and provided for before it ignites a disaster for stakeholders' interests at large globally. Consequently, it may be trusted for decisions having actual, tangible, and societal repercussions.
Implications
The findings are of material significance to policy makers in analyzing the effectiveness of financial markets not only in developed nations but also in emerging economies, like India and improving policy making for better governance by using the market related variables. It is hoped, that this study will pave the path for future regulatory implementation for the refinement of the global financial system and boosting investors' confidence.
Originality
This article brings forward the long-overdue discussion of the inflated nature of financial markets and their gross divergence from the real value of a company, particularly in a developing economy like India. It intends to fill this lack of literary as well as practical discussions on this critical issue.