scholarly journals Does stock price synchronicity effect information content of reported earnings? Evidence from the MENA region

2016 ◽  
Vol 6 (3) ◽  
pp. 43-49 ◽  
Author(s):  
Omar Farooq ◽  
Khondker Aktaruzzaman
Keyword(s):  
Information Content ◽  
Stock Price ◽  
Value Relevance ◽  
Information Environment ◽  
Governance Mechanisms ◽  
Mena Region ◽  
High Quality ◽  
Stock Price Synchronicity ◽  
Reported Earnings ◽  
Traditional Governance

This paper documents the effect of stock price synchronicity on the value relevance of reported earnings in the MENA region during the period between 2009 and 2013. Our results show that the information content of reported earnings increases with increase in stock price synchronicity. We document higher impact of earnings on returns for firms with higher stock price synchronicity. We argue that firms with high synchronicity have better information environment. As a result, these firms disclose information that is of high quality. We also show that information conveyed through stock price synchronicity is more important than information conveyed through traditional governance mechanisms.

scholarly journals Simultaneous Determination Of Stock Price Synchronicity And Dividend Payout Ratios: Evidence From The MENA Region

2016 ◽  
Vol 32 (4) ◽  
pp. 1025-1032 ◽  
Author(s):  
Omar M. Farooq ◽  
Mona A. ElBannan
Keyword(s):  
Simultaneous Determination ◽  
Stock Price ◽  
Information Environment ◽  
System Of Equations ◽  
Information Asymmetries ◽  
Mena Region ◽  
Cross Sectional ◽  
Stock Price Synchronicity ◽  
Dividend Payout

This paper examines the determinants of cross-sectional differences in stock price synchronicity and dividend payout ratio in the MENA region during the period between 2003 and 2013. These variables are related not only directly, but also indirectly, through their relationship with information environment of firms. To distinguish these effects, we examine the determinants of both variables within a system of equations. Our results indicate that both of these variables affect each other negatively. We argue that higher information asymmetries associated with firms exhibiting high synchronicity leads to lower payout ratios, while lower information asymmetries that accompany firms paying high dividends lead to lower synchronicity.

scholarly journals The Impact of Interest Coverage Ratio on Value Relevance of Reported Earnings: Evidence from South Korea

2019 ◽  
Vol 11 (24) ◽  
pp. 7193
Author(s):  
Hyunmi Ji
Keyword(s):  
Capital Market ◽  
Stock Price ◽  
Value Relevance ◽  
Hypothesis Test ◽  
Forecast Error ◽  
Operating Income ◽  
Coverage Ratio ◽  
Reported Earnings ◽  
The Impact ◽  
The Capital Market

This study examined the usefulness of the cash-based interest coverage ratio (CICR). It also verified the usefulness of accrual-based interest coverage ratio (AICR), which is used as a criterion for exiting insolvent companies. This paper analyzed whether the value relevance of earnings to stock price differs according to various interest coverage ratios. The CICR is measured by dividing the cash generated from operations by the interest payments. AICR is measured by operating income divided by interest expenses. The research model for the hypothesis test of this study is based on the Ohlson model, which has been used for the test of stock value relevance in many previous studies. As a result of the empirical analysis, the CICR is used as useful information by the investors in the capital market. CICR is used as useful information in the capital market as an indicator of sustainability of profits. This study suggests that supervisors and financial institutions can make rational decision-making if they consider AICR and CICR as criteria for exiting insolvent companies. The contribution of this study was to suggest that the CICR can be a useful indicator for determining whether a company is insolvent due to its relatively low forecast error and high predictability.

Inside the “Black Box” of Ownership Structures in Russia: Evidence from Stock Price Synchronicity

2020 ◽  
Vol 19 (3) ◽  
pp. 111-132
Author(s):  
Mohay Uddin Khan Khattak ◽  
Asheq Rahman ◽  
Ahsan Habib
Keyword(s):  
Adverse Effect ◽  
Ownership Structure ◽  
Stock Price ◽  
Black Box ◽  
Information Environment ◽  
Ownership Concentration ◽  
Stock Price Synchronicity ◽  
Negatively Associated ◽  
Ownership Structures ◽  
Cash Flow Rights

ABSTRACT Ownership structure, an important feature of corporate governance, acts as a determinant of the opacity of firms. This study penetrates the “black box” of the ownership structures of Russian corporations, identifies their salient features, and examines the effects of those features on the information environment (stock price synchronicity) of the corporations. Examining a sample of companies listed on the Moscow Exchange, we find that stock price synchronicity is: (1) positively associated with divergence between control and cash-flow rights of the ultimate owner; (2) negatively associated with the ownership concentration of the ultimate owner; (3) negatively associated with companies controlled indirectly by the state through holding corporations with the presence of oligarchs; and (4) negatively associated with firms with transparent oligarchs. Analyzing the economic impact of the results, we find the presence of non-transparent oligarchs and foreign-offshore holdings has the most adverse effect on stock price synchronicity.

scholarly journals Stock Price Synchronicity and Information Environment

2017 ◽  
Vol 9 (4) ◽  
pp. 215-234
Author(s):  
Ahmad Fraz ◽  
Arshad Hassan
Keyword(s):  
Stock Price ◽  
Information Environment ◽  
Stock Price Synchronicity

Large Shareholders and Stock Price Synchronicity: Evidence from Vietnam

2021 ◽  
pp. 097215092110056
Author(s):  
Anh Tho To ◽  
Trung Dao Le ◽  
Quoc Tuan Tran ◽  
Thanh Lam Nguyen ◽  
Thi Thu Hong Ho
Keyword(s):  
Stock Price ◽  
Fixed Effects ◽  
State Ownership ◽  
Information Environment ◽  
Standard Errors ◽  
Stock Exchanges ◽  
Firm Level ◽  
Stock Price Synchronicity ◽  
Listed Firms ◽  
Large Shareholders

This article aims to investigate how large shareholders affect the information environment, as measured by stock price synchronicity, of listed firms in the Vietnam stock exchanges. Upon applying fixed effects and instrumental variables fixed effects with firm-level clustered standard errors for a sample of 160 listed firms in the Vietnam stock exchanges over the period 2008–2017, the results show that stock price synchronicity is negatively associated with the two largest shareholders’ ownership and positively related to state ownership. The findings support that non-state large ownership plays an important role in improving the information environment in emerging markets where investor protection laws are relatively weak.

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