The impact of business group affiliation on stock price informativeness: Evidence from an emerging market

2019 ◽  
Vol 28 (2) ◽  
pp. 187-212 ◽  
Author(s):  
A. Melih Küllü ◽  
Doug Dyer ◽  
Gokhan Yilmaz ◽  
Zenu Sharma
Keyword(s):  
Stock Price ◽  
Emerging Market ◽  
Business Group ◽  
Group Affiliation ◽  
Price Informativeness ◽  
Stock Price Informativeness ◽  
Business Group Affiliation ◽  
The Impact

Corporate social responsibility, business group affiliation and shareholder wealth: evidence from an emerging market

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Eswaran Velayutham ◽  
Vijayakumaran Ratnam
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Emerging Market ◽  
Business Group ◽  
Shareholder Wealth ◽  
Group Affiliation ◽  
Content Type ◽  
Business Group Affiliation ◽  
Corporate Social ◽  
The Relationship

Purpose This paper aims to examine the relationship between corporate social responsibility (CSR) and shareholder wealth arising from announcement returns of security issuance from a frontier market. It also explores the role of business group affiliation (BGA) on this relationship. Design/methodology/approach The study uses short-term scenarios to examine the link between CSR and shareholder wealth using the event study methodology which helps us mitigate the reverse causality problems related to studies of the relationship between CSR and firm value. Abnormal returns surrounding the security issue announcements were generated using the market model. Findings This paper finds that security issuers with high CSR scores are associated with higher shareholder value. However, this paper finds that CSR activities of security issuers with BGA are value-destroying which is consistent with the agency perspective of CSR. Research limitations/implications This study is limited to only one nascent market, namely the Colombo Stock Exchange. Originality/value This study documents that CSR and BGA are important determinants, among others, of stock price reactions to security offerings in emerging markets.

Value Constraining or Value Enabling? The Impact of Business Group Affiliation on Post-Acquisition Performance by Emerging Market Firms

2020 ◽  
Vol 16 (2) ◽  
pp. 261-291
Author(s):  
Manish Popli ◽  
Radha Mukesh Ladkani
Keyword(s):  
Emerging Market ◽  
Business Groups ◽  
Governance Structure ◽  
Group Affiliation ◽  
Acquisition Performance ◽  
Theoretical Perspectives ◽  
Organizational Inertia ◽  
Empirical Context ◽  
Business Group Affiliation ◽  
The Impact

ABSTRACTLiterature has advanced two contrasting theoretical perspectives related to the governance structure of business groups: the ‘value-constraining’ perspective, which focuses on principal–principal agency conflict and organizational inertia theory, and the ‘value-enabling’ perspective, which emphasizes the role of business groups in mitigation of institutional voids. Building on these two competing lenses, we develop hypotheses to examine post-acquisition performance of affiliate firms relative to stand-alone firms. As our empirical context, we study 440 majority-stake, domestic and cross-border merger and acquisition deals closed by Indian firms during the period 2002–2013. The results imply that in emerging markets, despite concerns of organizational inertia and principal–principal agency issues, the value-enabling impact of group affiliation persists. We also examine the contextual impact of intergroup heterogeneity owing to group diversification on post-acquisition performance and find that greater group diversification leads to better performance for affiliate acquirers.

scholarly journals Financial Literacy and Stock Price Informativeness: a Cross-Country Study

2018 ◽  
Vol 63 (1) ◽  
pp. 63-72
Author(s):  
Anita Todea
Keyword(s):  
Private Information ◽  
Stock Prices ◽  
Financial Literacy ◽  
Stock Price ◽  
Individual Investors ◽  
Specific Information ◽  
Price Informativeness ◽  
Stock Price Informativeness ◽  
The Individual ◽  
The Impact

Abstract This paper examines the impact of financial literacy on stock price informativeness in a sample of firms from 20 countries. Using four measures of stock price informativeness, we find a significant relationship between higher financial literacy and higher stock price informativeness. The individual investors’ contribution regarding the incorporation of specific information into stock prices includes private information also and not mere specific information in the general sense. Financial knowledge is the key element that helps individual investors to incorporate specific information into stock prices.

scholarly journals Culture and Stock Price Reaction to Private Information

2018 ◽  
Vol 11 (1) ◽  
pp. 117-130
Author(s):  
Anita Todea
Keyword(s):  
Private Information ◽  
Stock Prices ◽  
Stock Price ◽  
Financial Openness ◽  
Price Informativeness ◽  
Stock Price Reaction ◽  
Stock Price Informativeness ◽  
Developed Stock Markets ◽  
The Impact ◽  
Low Uncertainty

AbstractThis paper examines the impact of culture on stock price informativeness in a sample of firms from 23 developed stock markets. We find that the information content of private information in stock prices is higher in more individualistic countries and in low uncertainty-avoiding countries. Moreover, financial openness stimulates the incorporation of private information into individualistic countries and in low uncertainty-avoiding countries.

The Impact of SFAS No. 131 Business Segment Data on the Market's Ability to Anticipate Future Earnings

2005 ◽  
Vol 80 (3) ◽  
pp. 773-804 ◽  
Author(s):  
Michael L. Ettredge ◽  
Soo Young Kwon ◽  
David B. Smith ◽  
Paul A. Zarowin
Keyword(s):  
Stock Price ◽  
Price Informativeness ◽  
Future Earnings ◽  
Earnings Response Coefficient ◽  
Single Segment ◽  
Segment Disclosure ◽  
Earnings Response ◽  
Stock Price Informativeness ◽  
Segment Data ◽  
The Impact

This study investigates the effect of firms' adoption of SFAS No. 131 segment disclosure rules on the stock market's ability to predict the firms' earnings, as captured by the forward earnings response coefficient (FERC). The FERC is the association between current-year returns and next-year earnings. SFAS No. 131, effective for fiscal years beginning after December 15, 1997, arguably increased both the quantity and quality of segment disclosure. Consistent with the standard's intended qualitative effects, pre-131 multi-segment firms experienced a significant increase in FERC after adopting SFAS No. 131. Consistent with the standard's intended quantitative effects, many pre-131 single-segment firms began disclosing multiple segments, and those that did experienced an increase in FERC. However, pre-131 single-segment firms that remained single segment (i.e., were unaffected by SFAS No. 131) had no change in FERC, indicating that the increase in FERC for 131-affected firms is not due to some other event concurrent to the adoption of SFAS No. 131. These results are robust under numerous procedures that control for characteristics of the sample firms and their earnings, providing strong evidence that SFAS No. 131 resulted in an increase in stock price informativeness for affected firms. Thus, we provide the first empirical price-based evidence that SFAS No. 131 provided more information (about future earnings) to the market, as the standard's proponents have suggested.

scholarly journals Business Group-Affiliation and Corporate Social Responsibility: Evidence from Listed Companies in China

2021 ◽  
Vol 13 (4) ◽  
pp. 2110
Author(s):  
Xin Huang ◽  
Xianling Jiang ◽  
Wei Liu ◽  
Qian Chen
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Emerging Market ◽  
Business Groups ◽  
Listed Companies ◽  
Business Group ◽  
Vital Role ◽  
Group Affiliation ◽  
Business Group Affiliation ◽  
Corporate Social

Business groups have played a vital role in the development of emerging markets. However, we share very limited understanding in the role of business group that act on affiliated firms’ CSR performance. Using manually sorted data on A-share listed companies and business groups in China from 2010–2017, we examine whether a company’s business group-affiliation affects its corporate social responsibility (CSR) performance and the mediating mechanisms of this association. Our empirical models show that group companies bear a higher level of social responsibility compared to independent companies. This positive relationship between group-affiliation and social responsibility relies on resource allocation through internal capital markets, rent-seeking initiatives, and consideration of corporate reputation. Moreover, group affiliation benefits the firm’s CSR performance in employee’s responsibilities, consumers’ responsibilities and environmental responsibilities, while significantly lower the shareholders’ responsibilities. Our empirical valuation of group companies’ CSR levels can serve as a benchmark for emerging market companies implementing social responsibility policies.

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