The source of information in prices and investment-price sensitivity

Edmans, Alex; Jayaraman, Sudarshan; Schneemeier, Jan

doi:10.1016/j.jfineco.2017.06.017

Cited by 238 publications

(100 citation statements)

References 31 publications

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“…The estimation result in column (2) shows that the estimated coefficient of AL2_PSI is 0.0511, and the value of the t-statistic is 2.7433, which is significant at the 1% confidence level; the estimation result of column (3) displays that the estimated coefficient of AL3_PSI is 0.0914, and the t-statistic is 3.3149, which is significant at the 1% confidence level; the estimation result in column (4) presents that the estimated coefficient of AL4_PSI is 0.1536, and the t-statistic is 4.2321, which is significant at the 1% confidence level; while the estimate of column (5) demonstrates that the estimated coefficient of AL5_PSI is 0.2082, and the t-statistic is 4.7067, which is significant at the 1% confidence level. The estimation result of column (6) illustrates that the estimated coefficient of AL6_PSI is 0.2352, and the t-statistic is 4.5140, which is significant at the 1% confidence level.…”

Section: Stock Price Nonsynchronicity and Tfpmentioning

confidence: 88%

“…Meanwhile, AL2_ logYrTrdTurnR, AL3_ logYrTrdTurnR, AL4_ logYrTrdTurnR, AL5_ logYrTrdTurnR, and AL6_ logYrTrdTurnR indicate the the average value of turnover rate for the previous two years, three years, four years, five years, and six years. Columns (1) to (6) represent the regression results of AL1_ logYrTrdTurnR to AL6_ logYrTrdTurnR, respectively. The R 2 of each regression are all more than 0.6, indicating that our model can explain to a large extent the variation of TFP.…”

Section: Stock Price Nonsynchronicity and Tfpmentioning

confidence: 99%

“…AL2_PSI, AL3_PSI, AL4_PSI, AL5_PSI, and AL6_PSI indicate the average value of stock price nonsynchronicity the previous two years, three years, four years, five years, and six years respectively. Columns (1) to (6) represent the regression results of AL1_PSI to AL6_PSI, respectively.…”

Section: Other Robustness Testmentioning

confidence: 99%

“…First, stock price informativeness may influence TFP through managerial learning [3][4][5]. Stock prices include information that managers do not know, such as information about future investment and growth opportunities, future demand of the firm's products and services, and financing opportunities, which may be related to the total factor productivity [6]. Consequently, more information being included in stock prices will help the managers make investment decisions, as well as allocate resources and finance capital more efficiently.…”

Section: Introductionmentioning

confidence: 99%

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Does Chinese Financial Market Information Promote Listed Manufacturing Firms’ Productivity?

2019

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There have been many research studies that have examined the impact of financial development on economic growth, but few of them have explored this problem from the perspective of financial market information. In this paper, we investigate whether the stock price informativeness affect the listed firms’ sustainable growth by using the Chinese manufacturing listed companies’ data from 2007 to 2017. Specifically, we use the stock price nonsynchronicity and turnover rate to measure stock price informativeness, and the economic growth sustainability is proxied by the listed companies’ total factor productivity, which is the driving force of firms’ sustainable and steady growth. We find that higher stock price informativeness is associated with higher total factor productivity, no matter whether the stock price informativeness is proxied by the stock price nonsynchronicity or turnover rate. This finding is robust when we mitigate for endogeneity issues, and when we use the return on assets (ROA) as an alternative proxy for economic growth. Our results show that the stock price informativeness can significantly improve the total factor productivity of the listed companies, and play an important role in the sustainable development of listed manufacturing enterprises.

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Section: Stock Price Nonsynchronicity and Tfpmentioning

confidence: 88%

Section: Stock Price Nonsynchronicity and Tfpmentioning

confidence: 99%

Section: Other Robustness Testmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Does Chinese Financial Market Information Promote Listed Manufacturing Firms’ Productivity?

2019

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“…For instance, Turley (2012) notes that the price of trading a typical share has declined from 5% of the share's price in 1975 to 0.1% in more recent years.…”

Section: Providing Diversification Opportunitiesmentioning

confidence: 99%

Should we worry about the decline of the public corporation? A brief survey of the economics and external effects of the stock market

Koptyug

Persson

Tåg

2020

The North American Journal of Economics and Finance

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. ABSTRACTIn recent years, the number of listed companies has been declining in many countries across the world. This paper provides a selective survey of the literature on the real economic effects of the stock market to assess the potential effects of this decline and determine whether it is likely to continue. The leading economic role of the stock market's primary market, in which firms raise capital by issuing new shares, is to help growing firms secure financing. We discuss providing and certifying information, coordinating investors, and easing the redeployment of capital as the means through which capital allocation can be achieved efficiently. The main economic role of the stock market's secondary market, the trade in existing shares, is to provide liquidity to shareholders, to aid in price discovery, and to provide diversification opportunities. Positive external effects from an active stock market may arise on consumers, labour and private firm due to increased corporate investment, more social responsible business strategies and a more positive business climate. Negative external effects on capital allocation and productivity can arise from short-termism, market mispricing, and increased cross-ownership. Local stock markets can spur innovation and foreign direct investment (FDI) and reduce the risk of early cross-border acquisitions. Given the myriad of useful economic functions the stock market performs, a future entirely absent of public companies is difficult to imagine and the decline is therefore likely at some point to come to an end. Whether we need to worry about the decline depends on the relative importance of the positive and negative external effects, a topic we feel warrants more research.

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Do outsiders listen to insiders? The role of government support in market reactions to earnings announcements

2020

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We investigate whether government support influences investors' perceptions of firms' financial disclosure. We find that earnings announcements from firms receiving more subsidies are perceived as more reliable by outsiders, eliciting stronger market reactions. Further analysis indicates that this positive effect is more pronounced when firms have poorer corporate governance and greater information asymmetry. Supplementary analysis shows that government support enhances investors' reactions through three possible channels: improving firms' earnings quality, investment efficiency, and market competitiveness. There are implications for the informativeness of firms' financial disclosures and the mechanism that government support on investors' attitude towards the released information.

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The source of information in prices and investment-price sensitivity

Cited by 238 publications

References 31 publications

Does Chinese Financial Market Information Promote Listed Manufacturing Firms’ Productivity?

Does Chinese Financial Market Information Promote Listed Manufacturing Firms’ Productivity?

Should we worry about the decline of the public corporation? A brief survey of the economics and external effects of the stock market

Do outsiders listen to insiders? The role of government support in market reactions to earnings announcements

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