Information processing costs and stock price informativeness: Evidence from the XBRL mandate

Using the eXtensible Business Reporting Language (XBRL) mandate as a pseudo-natural experiment, we provide empirical evidence that reduction in information processing costs (IPC) leads to more informative stock price through two channels, the firm-specific information incorporation, and increased disclosures. We also find that younger firms with relatively shorter public disclosure history benefit more than older firms, supporting the conjecture that XBRL accelerates the information incorporation process and expedites market’s learning about younger firms faster. Our results are robust to alternative measures of price informativeness, individual batch tests, placebo tests, and potential bias from financial industry. JEL Classification: G14, M41, M48

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Effect of Stock Price Information on Timing of Share Repurchases

Summer - GATR Journal of Finance and Banking Review ◽

10.35609/jfbr.2019.4.1(5) ◽

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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Can microblogging information disclosure reduce stock price synchronicity? Evidence from China

Australian Journal of Management ◽

10.1177/0312896218796884 ◽

2018 ◽

Vol 44 (2) ◽

pp. 282-305 ◽

Cited By ~ 1

Author(s):

Donghua Zhou ◽

Yujie Zhao ◽

Philip T Lin ◽

Bin Li ◽

Adrian (Waikong) Cheung

Keyword(s):

Stock Prices ◽

Information Disclosure ◽

Stock Price ◽

Negative Relationship ◽

Jel Classification ◽

Specific Information ◽

Chinese Stock Market ◽

Stock Price Synchronicity ◽

Alternative Measures ◽

The Impact

We study the relationship between stock price synchronicity and information disclosure of firms listed in the Chinese stock market, using hand-collected data on firms’ official microblogging content in Sina Weibo, a popular microblogging service in China. We find that after controlling for the impact of traditional media, the number of Weibo tweets is related negatively to stock price synchronicity, indicating that stock prices incorporate firm-specific information disclosed in the firm’s official Weibo. Number of microblogging fans can strengthen this negative relationship. Our result is robust to alternative measures of stock price synchronicity, microblogging information disclosure, and to endogeneity issues. JEL Classification: G14, G15

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

Studia Universitatis Babe-Bolyai Oeconomica ◽

10.2478/subboec-2018-0004 ◽

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.

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Profit warning and its association with stock price informativeness: experimental analysis

Journal of Investment Compliance ◽

10.1108/joic-10-2020-0032 ◽

2020 ◽

Vol 21 (4) ◽

pp. 209-230

Author(s):

Adel Almasarwah ◽

Mohammad Almaharmeh ◽

Ahmed M. Al Omush ◽

Adel Sarea

Keyword(s):

Corporate Governance ◽

Stock Price ◽

Robust Regression ◽

Developing Economies ◽

Specific Information ◽

Price Informativeness ◽

Stock Price Synchronicity ◽

Content Type ◽

Moderating Variables ◽

Stock Price Informativeness

Purpose This study investigates the nature of the association between profit warnings and stock price informativeness in the context of Jordan as an emerging country. Design/methodology/approach The authors used a large panel data set that related to stock price synchronicity and profit warnings percentages on the Amman Stock Exchange for the period spanning 2007–2018. Robust regression was used as a parametric test. This enabled us to obtain stronger results that fall in line with our prediction that a profit warning encourages firm investors to collect and process more firm-specific information than common market information. Findings Our findings show a significant positive effect of profit warnings on the amount of firm-specific information incorporated into stock price, which means that the greater the percentage of profit warnings the more likely that more firm-specific information will be incorporated in stock price synchronicity. In addition, corporate governance characteristics (moderating variables) significantly increase the level of the relationship between profit warnings and stock price synchronicity. Practical implications Our study results could be useful to investors, senior managers, and regulators in Jordanian firms, particularly in relation to decisions about enhancing the quality of financial statements. In addition, our results provide new evidence about the consequences of earnings announcements for information content and the informativeness of stock prices. Our methodology and evaluation of profit warnings may also demonstrate useful evidence for future researchers on profit warnings and stock price informativeness in developing economies, especially given that such evidence is scarce in developing economies. Originality/value This research is the first study of its kind on emerging markets, particularly in the Middle East. Moreover, entering the corporate governance variables as moderating variables to the robust regression was found to be more powerful than other regressions.

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