Stock price informativeness and the propagation of idiosyncratic shocks by institutional investors

2021 ◽  
Author(s):  
Iván Blanco ◽  
Jose-Maria Martin-Flores ◽  
Alvaro Remesal
Keyword(s):  
Institutional Investors ◽  
Stock Price ◽  
Price Informativeness ◽  
Idiosyncratic Shocks ◽  
Stock Price Informativeness

scholarly journals Corporate Governance and Stock Price informativeness: Evidence from an Emerging Market

2020 ◽  
Vol 6 (2) ◽  
pp. 593-605
Author(s):  
Muhammad Shahid Rasheed ◽  
Shahzad Kouser
Keyword(s):  
Corporate Governance ◽  
Institutional Investors ◽  
Stock Price ◽  
Emerging Market ◽  
Investor Protection ◽  
Cash Flows ◽  
Governance Mechanism ◽  
Price Informativeness ◽  
Controlling Shareholders ◽  
Stock Price Informativeness

Emerging markets usually have weaker legal and governance environment. The weaker enforcement of investor protection laws leads to a poor information environment. Using data of all the listed non-financial firms from Pakistan stock exchange (PSX), we document the relationship between corporate governance variables and stock price informativeness. The results from two-stage least squares (2SLS) reveal that controlling shareholders in the form of block holding plays an effective role in improving informativeness. Due to the presence of these block ownership, the institutional investors remain largely short term investors and act passively. This behavior of institutional investors encourages managers to extract more cash flows leading to higher synchronicity. These findings suggest market regulators develop such a corporate governance mechanism that not only ensures investor protection but also advise firms to reduce information asymmetry by better disclosure and transparency. More specifically, in the Pakistani context, traditional corporate governance mechanisms through board room regulations may not improve informativeness, and regulators need to regulate the ownership regulations, including family ownership and controlling shareholders.

Do Foreign Institutional Investors Improve Price Efficiency?

2020 ◽  
Author(s):  
Marcin Kacperczyk ◽  
Savitar Sundaresan ◽  
Tianyu Wang
Keyword(s):  
Institutional Investors ◽  
Stock Price ◽  
Foreign Ownership ◽  
Market Liquidity ◽  
Price Informativeness ◽  
Firm Level ◽  
Price Efficiency ◽  
Foreign Institutional Investors ◽  
Stock Price Informativeness ◽  
The Impact

Abstract We study the impact of foreign institutional investors on price efficiency with firm-level international data. Using additions to the MSCI index and the U.S. Jobs and Growth Tax Relief Reconciliation Act as exogenous shocks to foreign ownership, we show that greater foreign ownership increases stock price informativeness, especially in developed economies. This increase arises from new information that foreign investors bring in and displacement of less-informed domestic retail investors. Finally, we show that foreign ownership, particularly from active investors, increases market liquidity, reduces firms’ cost of equity, and increases firms’ real investment growth.

scholarly journals Investigating the effect of stock price informativeness on labor investment efficiency

2018 ◽  
Vol 3 (5) ◽  
pp. 209-232
Author(s):  
Rezvan Hejazi ◽  
Hamid Kalhornia ◽  
Iman Dadashi ◽  
Amir Firooznia ◽  
◽  
...  
Keyword(s):  
Stock Price ◽  
Investment Efficiency ◽  
Price Informativeness ◽  
Stock Price Informativeness

Effect of Stock Price Information on Timing of Share Repurchases

2019 ◽  
Vol 4 (1) ◽  
pp. 36-46
Author(s):  
Chong-Meng Chee ◽  
Nazrul Hisyam Bin Ab Razak
Keyword(s):  
Cost Saving ◽  
Private Information ◽  
Stock Price ◽  
Stock Return ◽  
Market Timing ◽  
Abnormal Returns ◽  
Jel Classification ◽  
Share Repurchases ◽  
Price Informativeness ◽  
Stock Price Informativeness

Objective - This study investigates whether private information newly incorporated into stock price enhances performance in timing share repurchases. Methodology/Technique - Cost saving gained in share repurchases is used a proxy for performance of market-timing in share repurchases and firm-specific stock return variation is used to gauge stock price informativeness. A sample of 334 U.S. repurchasing firms are tested using panel data regression. Findings - The paper concludes that managers possess better market timing skill by obtaining more cost saving from their share repurchases when private information is reflected in stock price. Stock price informativeness may be the tool for managers to improve their market timing skill to take advantage of the stock market. Furthermore, firms with smaller size and a higher market-to-book ratios, and firms with higher cash-to-assets ratios are found to achieve more cost saving in buying back their shares indicating that these firms are able to time the market in share repurchasing. Novelty – Despite numerous previous studies focusing solely on using share repurchases announcement for computing cumulative abnormal returns in testing managerial market timing, this study contributes to the literature in several ways: (i) providing evidence relating stock price informativeness and performance of market-timing in share repurchases; (ii) developing a better timing measure constructed using actual repurchasing data; (iii) adopting a cost saving measure as the timing measure instead of cumulative abnormal return. Type of Paper - Empirical. Keywords: Managerial Learning Hypothesis; Market Timing; Stock Repurchase; Stock Price Informativeness; Firm-specific Stock Return Variation. JEL Classification: G12, G13, G14. DOI: https://doi.org/10.35609/jfbr.2019.4.1(5)

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