Journal ArticleDOI
Learning from Peers' Stock Prices and Corporate Investment
Reads0
Chats0
TLDR
In this paper, the authors show that the sensitivity of a firm's investment to its stock price is lower when its peers' stock prices informativeness is higher or when demands for its products and their peers' products are more correlated.Abstract:
Peers' valuation matters for firms' investment: a one standard deviation increase in peers' valuation is associated with a 5.9% increase in corporate investment. This association is stronger when a firm's stock price informativeness is lower or when its managers appear less informed. Also, the sensitivity of a firm's investment to its stock price is lower when its peers' stock prices informativeness is higher or when demands for its products and its peers' products are more correlated. Furthermore the sensitivity of firms' investment to their peers' valuation drops significantly after going public. These findings are uniquely predicted by a model in which managers learn information from their peers' valuation.read more
Citations
More filters
Journal ArticleDOI
Socially responsible firms
TL;DR: The authors found that well-governed firms that suffer less from agency concerns (less cash abundance, positive pay-for-performance, small control wedge, strong minority protection) engage more in CSR.
Journal ArticleDOI
Peer Effects of Corporate Social Responsibility
Jie Cao,Hao Liang,Xintong Zhan +2 more
TL;DR: In this paper, the authors investigate how firms react to their peers' commitment to corporate social responsibility (CSR), using a regression discontinuity design that relies on the passing or failing of CSR proposals by a small margin of votes during shareholder meetings.
Journal ArticleDOI
Dividend Payments as a Response to Peer Influence
TL;DR: In this article, the authors show industrial peer firms influence the timing and size of their peers' dividends, and that peer effects speed up the time to dividend change by 1.5 quarters and increase payments by 15%.
Journal ArticleDOI
The Source of Information in Prices and Investment-Price Sensitivity
TL;DR: In this article, the authors use the staggered enforcement of insider trading laws across 27 countries as a shock to the source of information that leaves total information unchanged: enforcement reduces (increases) managers' (outsiders') contribution to the stock price.
Journal ArticleDOI
Big Data as a Governance Mechanism
TL;DR: In this article, the authors empirically investigated two effects of alternative data availability: stock price informativeness and its disciplining effect on managers' actions, and they found that the introduction of these data increases prices through decreased information acquisition costs, particularly in firms where sophisticated investors have higher incentives to uncover information.
References
More filters
Journal ArticleDOI
Bid, ask and transaction prices in a specialist market with heterogeneously informed traders
TL;DR: The presence of traders with superior information leads to a positive bid-ask spread even when the specialist is risk-neutral and makes zero expected profits as discussed by the authors, and the expectation of the average spread squared times volume is bounded by a number that is independent of insider activity.
Posted Content
Herd Behavior and Investment
TL;DR: In this paper, the authors examine some of the forces that can lead to herd behavior in investment and discuss applications of the model to corporate investment, the stock market, and decision making within firms.
Journal ArticleDOI
Earnings Management and the Long‐Run Market Performance of Initial Public Offerings
TL;DR: This article showed that companies with unusually high accruals in the initial public offering experience poor stock return performance in the three years thereafter, and that these differences are statistically and economically significant in a variety of specifications.
Journal ArticleDOI
Liquidity, Information, and Infrequently Traded Stocks
TL;DR: In this paper, the authors investigated whether differences in information-based trading can explain observed differences in spreads for active and infrequently traded stocks and found that the probability of information based trading is lower for high volume stocks.