Stock Markets, Banks and Economic Growth: Some Evidence on the Role of Stock Price Informativeness

2011 ◽  
Author(s):  
Fang-Chin Cheng ◽  
Ferdinand A. Gul
Keyword(s):  
Economic Growth ◽  
Stock Markets ◽  
Stock Price ◽  
Price Informativeness ◽  
Stock Price Informativeness

The real effects of primary and secondary equity markets on firm performance

2017 ◽  
Vol 13 (4) ◽  
pp. 397-418 ◽  
Author(s):  
Andriansyah Andriansyah
Keyword(s):  
Stock Prices ◽  
Stock Price ◽  
Operating Performance ◽  
Equity Markets ◽  
Secondary Market ◽  
Price Informativeness ◽  
Content Type ◽  
Real Effects ◽  
Stock Price Informativeness

Purpose The purpose of this paper is to investigate the real effects of primary and secondary equity markets on the post-issue operating performance of initial public offering (IPO) firms. Design/methodology/approach The author utilizes the intended use of proceeds as a proxy variable for the primary market and the investment-to-price sensitivity and the informativeness of stock prices as alternative proxy variables for the secondary market. The compositional data, and non-parametric quantile regressions which are more robust to outliers than standard least square regressions, are employed for Indonesian equity market over the period of 1999-2013. Findings While confirming that firm operating performance can be explained by the firm’s motivation to go public, the author also shows that the operating performance is positively affected by investment-to-price sensitivity and negatively affected by stock price informativeness. The stock prices affect investment decisions by the way that the more liquid a stock is, the more informative its price is, and the more relevant stock prices are in investment decisions. These findings still hold after controlling for ownership structure. Originality/value Departing from the existing literature, the author investigates the role of primary and secondary equity markets for firm performance in an integrated framework because both markets interact closely in reality. The author shows that public listed firms can benefit both from the capital-raising function of the primary market and from the informational role of the stock prices of the secondary market. A measure of stock price informativeness, 1−R2, however, must be understood in the context of thin trading in the sense that the level of liquidity affects the level of stock price informativeness.

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

2019 ◽  
Vol 11 (2) ◽  
pp. 329
Author(s):  
Fujun Lai ◽  
Qian Wang ◽  
Qingxiang Feng
Keyword(s):  
Economic Growth ◽  
Total Factor Productivity ◽  
Financial Market ◽  
Stock Price ◽  
Turnover Rate ◽  
Listed Companies ◽  
Market Information ◽  
Factor Productivity ◽  
Price Informativeness ◽  
Stock Price Informativeness

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.

The Role of Stock Price Informativeness in Compensation Complexity

2019 ◽  
Author(s):  
Benjamin Bennett ◽  
Gerald T. Garvey ◽  
Todd T. Milbourn ◽  
Zexi Wang
Keyword(s):  
Stock Price ◽  
Price Informativeness ◽  
Stock Price Informativeness

Governance through Trading: Institutional Swing Trades and Subsequent Firm Performance

2013 ◽  
Vol 48 (2) ◽  
pp. 427-458 ◽  
Author(s):  
David R. Gallagher ◽  
Peter A. Gardner ◽  
Peter L. Swan
Keyword(s):  
Firm Performance ◽  
Information Acquisition ◽  
Stock Price ◽  
Corporate Management ◽  
Institutional Trading ◽  
Short Term ◽  
Price Informativeness ◽  
Stock Price Informativeness ◽  
Short Horizon

AbstractUsing unique daily fund-manager trade data, we examine the role of institutional trading in influencing firm performance. We show that short-horizon informed trading by multiple institutional investors effectively disciplines corporate management. Our focus is on short-term “swing” trades, sequences with three phases (e.g., buy-sell-buy). We find swing trades increase stock price informativeness, are profitable after costs, and improve market efficiency. This increase in stock price informativeness is associated with subsequent firm outperformance. Trades are most beneficial with optimal stock holdings that reflect the information acquisition incentives of investors as well as liquidity costs.

scholarly journals Effects of Financial Market Information on Firms’ Productivity Under Operating Pressure and Financial Constraints: Evidence From the Chinese Stock Market

SAGE Open ◽  
2021 ◽  
Vol 11 (4) ◽  
pp. 215824402110613
Author(s):  
Fujun Lai ◽  
Sha Zhu ◽  
Qingxiang Feng ◽  
Yi Yao
Keyword(s):  
Economic Growth ◽  
Total Factor Productivity ◽  
Financial Market ◽  
Stock Price ◽  
Financial Constraints ◽  
Operating Pressure ◽  
Market Information ◽  
Factor Productivity ◽  
Price Informativeness ◽  
Stock Price Informativeness

Many studies have examined the impact of economic fundamentals on the financial market, but few have explored how financial market information affects the real economy. In this paper, we examine the effects of stock price informativeness on firms’ total factor productivity (TFP) using panel data of Chinese listed manufacturing firms over the period 2007 to 2017. Specifically, we use stock price nonsynchronicity to measure stock price informativeness, and real economic activity efficiency is proxied by the listed firms’ total factor productivity estimated by the LP and ACF methods. We find that stock price informativeness is positively associated with firms’ productivity in China. More importantly, we propose two possible mechanisms to intensify the consequences of stock price informativeness and find that operating pressure and financial constraints can positively intensify the relationship between stock price informativeness and firms’ TFP. As financial information is crucial for sustainable and steady economic growth, our research not only helps to reveal how the financial market promotes economic growth but also helps to provide new ideas for managers and policy-makers to alleviate operating pressure and financing constraints.

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