scholarly journals Stock Return Synchronicity and Analysts’ Forecast Properties

2016 ◽  
Vol 18 (3) ◽  
pp. 301
Author(s):  
Joong-Seok Cho ◽  
Hyung Ju Park ◽  
Ji-Hye Park
Keyword(s):  
Stock Price ◽  
Stock Return ◽  
Earnings Forecasts ◽  
Information Environment ◽  
Specific Information ◽  
Firm Level ◽  
Industry Level ◽  
Level Information ◽  
Annual Earnings

Using stock return synchronicity as a measure of a firm’s information environment, our research investigates how the firms’ stock return synchronicity affects analysts’ forecast properties for the accuracy and optimism of the analysts’ annual earnings forecasts. Stock return synchronicity represents the degree to which market and industry information explains firm-level stock return variations. A higher stock return synchronicity indicates the higher quality of a firm’s information environment, because a firm’s stock price reflects more market-level and industry-level information relative to firm-specific information. Our study shows that stock return synchronicity positively affects the forecast properties. Our finding shows that when stock return synchronicity is high, analysts’ annual earnings forecasts are more accurate and less optimistically biased.

The Influence of Analysts, Institutional Investors, and Insiders on the Incorporation of Market, Industry, and Firm-Specific Information into Stock Prices

2004 ◽  
Vol 79 (4) ◽  
pp. 1119-1151 ◽  
Author(s):  
Joseph D. Piotroski ◽  
Darren T. Roulstone
Keyword(s):  
Institutional Investors ◽  
Stock Prices ◽  
Stock Return ◽  
Relevant Information ◽  
Specific Information ◽  
Specific Component ◽  
Future Earnings ◽  
Industry Level ◽  
Level Information ◽  
Information Advantage

We investigate the extent to which the trading and trade-generating activities of three informed market participants—financial analysts, institutional investors, and insiders—influence the relative amount of firm-specific, industry-level, and market-level information impounded into stock prices, as measured by stock return synchronicity. We find that stock return synchronicity is positively associated with analyst forecasting activities, consistent with analysts increasing the amount of industry-level information in prices through intra-industry information transfers. In contrast, stock return synchronicity is inversely related to insider trades, consistent with these transactions conveying firm-specific information. Supplemental tests show that insider and institutional trading accelerate the incorporation of the firm-specific component of future earnings news into prices alone, while analyst forecasting activity accelerates both the industry and firm-specific component of future earnings news. Our results suggest that all three parties influence the firm's information environment, but the type of price-relevant information conveyed by their activities depends on each party's relative information advantage.

Information and psychological security in the development of computer literacy in the elderly

2021 ◽  
pp. 270-278
Author(s):  
Tatyana Borisovna Berestok
Keyword(s):  
Quality Of Life ◽  
Elderly People ◽  
Computer Literacy ◽  
Negative Impact ◽  
Social Institutions ◽  
The Elderly ◽  
Information Environment ◽  
Specific Information ◽  
Negative Factors

This article deals with the issue of self-preservation of elderly people when learning to work on a computer from the point of view of information and psychological security. The necessity of solving new socio-psychological problems is indicated: to develop the ability to give a correct assessment of a specific information threat, to prevent the negative impact of the information environment, to resist negative factors, and to contribute to improving the quality of life. The purpose of counseling elderly people is to develop their ability to understand the problem of the negative impact of the information environment on psychological and physiological health, to be able to apply methods to ensure information and psychological security. Consulting and educational work with the elderly and employees of social institutions engaged in professional activities directly related to the above category should be aimed at preventing cases of fraudulent activities. Consulting work with them should not only meet the general principles of building psychological contact, but also cause an understanding of the importance of compliance with security in the digital sphere. Elderly people develop the ability to assess correctly a specific information threat and prevent the negative impact of the information environment by providing adequate resistance to negative factors and contributing to improving their quality of life. It is increasingly difficult for older people to navigate threats, unmotivated anxiety increases, depressiveness appears and becomes fixed, and asocial personality traits are formed. At the present time, it is necessary to consider the formation of information and computer literacy as a mechanism to counteract the negative impact of the information environment and a necessary condition for developing an effective strategy for the social adaptation of elderly people.

Aggressive tax planning and stock price synchronicity: evidence from China

2019 ◽  
Vol 15 (5) ◽  
pp. 829-857 ◽  
Author(s):  
Hua Feng ◽  
Ahsan Habib ◽  
Gao liang Tian
Keyword(s):  
Stock Prices ◽  
Stock Price ◽  
Tax Planning ◽  
Specific Information ◽  
Price Informativeness ◽  
Firm Level ◽  
Stock Price Synchronicity ◽  
Content Type ◽  
Tax Aggressiveness ◽  
Practical Implications

Purpose The purpose of this paper is to investigate the association between aggressive tax planning and stock price synchronicity. Design/methodology/approach Employing the special institutional background of China, this study constructs tax aggressiveness and stock price synchronicity measures for a large sample of Chinese stocks spanning the period 2003–2015. The authors employ OLS regression as the baseline methodology, and a fixed effect model, the Fama–Macbeth method and GMM as sensitivity checks. Matched samples and difference-in-difference analyses are used to control for endogeneity. Findings The authors find a significant and positive association between aggressive tax planning and stock price synchronicity. Because material information about risky tax transactions tends to be hidden in various tax accruals accounts, aggressive tax strategies make financial statements less transparent, thereby, increasing information asymmetry and decreasing stock price informativeness. The authors also find that the firms engaging in aggressive tax planning exhibit relatively high corporate opacity. In addition, the authors find that improvements in the tax enforcement regime, ownership status and high-quality auditors all constrain the adverse effects of tax aggressiveness. Practical implications This study has important practical implications for China’s regulators, who are striving to reduce the tax burden of enterprises. It also helps investors to consider investment decisions more appropriately from a taxation perspective. Originality/value First, this paper contributes to the stock price efficiency literature by identifying the effect of a hitherto unexamined factor, namely, firm-level aggressive tax planning, on the efficiency of stock prices. Second, this study provides further empirical evidence to support the agency view of tax aggressiveness, and the informational interpretation of stock price synchronicity. Third, this study helps us better understand the effects of firm-level tax policy on firm-specific information capitalization in an environment where overall country-level investor protection is relatively weak.

The Relevance of Information Technology Expenditures

2010 ◽  
Vol 24 (2) ◽  
pp. 39-77 ◽  
Author(s):  
B. Charlene Henderson ◽  
Kevin Kobelsky ◽  
Vernon J. Richardson ◽  
Rodney E. Smith
Keyword(s):  
Information Technology ◽  
Stock Price ◽  
Abnormal Returns ◽  
Firm Level ◽  
Policy Makers ◽  
Market Participants ◽  
Future Performance ◽  
Long Run ◽  
Level Information ◽  
Information Technology Expenditures

ABSTRACT: Although information technology (hereafter, IT) expenditures represent an increasingly large investment for most corporations, firms are not required to disclose them separately in their financial statements. We hypothesize and find evidence that information about a firm’s IT expenditures helps explain its future performance as reflected in both accounting measures (residual income, earnings volatility) and market measures (stock price and long-run abnormal returns). In particular, we provide evidence of market mispricing and suggest the lack of firm-level annual IT expenditure disclosure as one potential reason for such mispricing. Altogether, the evidence presents a persuasive case that information about a firm’s IT expenditures is useful to stock market participants. The evidence we report is useful to managers and accounting policy makers contemplating the public disclosure of firm-level information about IT investments.

scholarly journals Climbing the Rungs of the Quality Ladder: FDI and Domestic Exporters in Romania

2020 ◽  
Vol 130 (628) ◽  
pp. 937-955
Author(s):  
Matej Bajgar ◽  
Beata Javorcik
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Multinational Enterprises ◽  
Positive Relationship ◽  
Host Countries ◽  
Firm Level ◽  
Level Information ◽  
Quality Ladder ◽  
Quality Of Products

Abstract This article argues that inflows of foreign direct investment can facilitate export upgrading in host countries. Using customs data merged with firm-level information for 2005–11, it shows a positive relationship between the quality of products exported by Romanian firms and the presence of multinational enterprises (MNEs) in the upstream (input-supplying) industries. Export quality is also positively related to MNE presence in the downstream (input-sourcing) industries and the same industry, but these relationships are less robust. These conclusions hold both when the product quality is proxied with unit values and when it is estimated following the approach of Khandelwal et al. (2013).

Do statutory internal auditors influence stock price crash risk? Firm-level evidence from Korea

2019 ◽  
Vol 35 (2) ◽  
pp. 207-237
Author(s):  
Soo Yeon Park ◽  
Hyun-Young Park
Keyword(s):  
Stock Price ◽  
Bad News ◽  
Crash Risk ◽  
Fiscal Year ◽  
High Quality ◽  
Firm Level ◽  
Content Type ◽  
Internal Auditors ◽  
Financial Expertise

Purpose Based on 1,798 firm-year observations from 2009 to 2013, using publicly available disclosure data for Korean listed firms, this study aims to examine whether statutory internal auditors influence firm-level stock price crash risk. Design/methodology/approach Based on the bad news hoarding theory of crash risk, the authors investigate the association between the quality of statutory internal auditors and one-year-ahead stock price crash risk. The quality of statutory internal auditors is measured as the compensation of statutory internal auditors and the financial expertise of statutory internal auditors. Stock price crash risk is measured as an indicator variable whether a firm experiences one or more crash weeks during the fiscal year period. Findings The authors find that higher quality of statutory internal auditors – measured through greater compensation and greater financial expertise – is associated with lower possibilities of future stock price crash risk. These results indicate that high-quality statutory internal auditors mitigate bad news hoarding of managers because of their greater capability and stronger incentive to lower litigation risk and preserve their reputation. The results are mostly robust to different measures for stock price crash risk and the quality of statutory internal auditors. Practical implications The findings of this study regarding stock price crash risk are important for investors because such risk can significantly affect investor welfare. The results indicate that statutory internal auditors play an important role in controlling future stock price crash risk and maintaining stability in the equity market. Originality/value This study adds to the extant literature on the determinants of stock price crash risk and is the first to examine the impact of internal auditors on stock price crash risk. Moreover, this study also contributes to the existing literature on internal auditor quality by showing that high-quality statutory internal auditors reduce risks in financial markets.

Analysts’ Incentives to Produce Industry-Level versus Firm-Specific Information

2011 ◽  
Vol 46 (3) ◽  
pp. 757-784 ◽  
Author(s):  
Mark H. Liu
Keyword(s):  
Stock Returns ◽  
Idiosyncratic Volatility ◽  
Specific Information ◽  
Investment Performance ◽  
Absolute Value ◽  
Industry Level ◽  
Level Information ◽  
Level Versus ◽  
The Absolute

AbstractUsing stock returns around recommendation changes to measure the information produced by analysts, I find that analysts produce more firm-specific than industry-level information. Analysts produce more firm-specific information on stocks with higher idiosyncratic return volatilities. The amount of industry information produced by analysts increases with the absolute value of the stock’s industry beta and decreases with the stock’s idiosyncratic volatility. Other stocks in the industry also respond to the recommendation change, and the magnitude of the response increases with the absolute value of the industry beta of the recommended stock and that of other stocks in the industry. I also offer results on how investors may use analyst research more effectively and potentially improve their investment performance.

Corporate Disclosure Quality and Properties of Analysts' Information Environment

2003 ◽  
Vol 18 (3) ◽  
pp. 355-378 ◽  
Author(s):  
Donal Byard ◽  
Kenneth W. Shaw
Keyword(s):  
Private Information ◽  
Public Information ◽  
Earnings Forecasts ◽  
Corporate Disclosure ◽  
Empirical Measures ◽  
Information Precision ◽  
Public Disclosures ◽  
Privileged Communications ◽  
Annual Earnings

This study examines how the quality of corporate disclosures impacts the precision of information that financial analysts incorporate into their forecasts of annual earnings. Our empirical measures distinguish between individual analysts' common and idiosyncratic (uniquely private) information precision, and between the quality of firms' public disclosures and the quality of their private communications with analysts. We find that higher quality disclosures increase the precision of analysts' commonand idiosyncratic information. Further, we find that the increased precision of analysts' idiosyncratic information is primarily due to higher quality annual and quarterly accounting-related disclosures, publicly available to all investors. These results suggest that higher-quality public information better enables analysts to generate idiosyncratic insights. We find no evidence to suggest that the quality of analysts' private communications with management impacts analysts' information precision after controlling for the quality of publicly available accounting information. In sum, the results suggest that when forming their annual earnings forecasts, analysts rely more heavily on publicly available financial data rather than privileged communications with management.

Relative Firm Profitability and Stock Return Sensitivity to Industry-Level News

2011 ◽  
Vol 86 (4) ◽  
pp. 1321-1347 ◽  
Author(s):  
Shengquan Hao ◽  
Qinglu Jin ◽  
Guochang Zhang
Keyword(s):  
Cost Efficiency ◽  
Stock Price ◽  
Stock Return ◽  
Capital Intensity ◽  
Industry Level ◽  
Firm Profitability ◽  
Common Risk Factors ◽  
Cournot And Bertrand Competition ◽  
Relative Profitability ◽  
Return Sensitivity

ABSTRACT This study provides theory and evidence to demonstrate how relative firm profitability within an industry affects stock return sensitivity to industry-level news. Extending the Cournot and Bertrand competition models, we predict that (1) the returns of less profitable firms in an industry are more sensitive to industry-level news than those of more profitable firms, and that (2) this inverse relation between relative profitability and return sensitivity is more pronounced when there is positive rather than negative industry news, especially in industries with high (versus low) capital intensity. Using industry returns to proxy for industry-level news, we obtain empirical results consistent with these predictions. We further find that the two fundamental factors that contribute to profitability—cost efficiency and market share—each exhibit an effect similar to that of relative profitability in affecting return sensitivity. Our results remain unchanged after controlling for stock price movements attributable to common risk factors and firm-specific accounting information, and they hold over a range of robustness tests.

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