Abstract:We examine the relation between a firm's equity R2 and the pricing and design of its debt securities. We find that firms with less synchronous stock returns are associated with a higher cost of debt after controlling for default and liquidity risks. Bonds issued by low synchronicity issuers also experience larger price reactions to information signals provided by equity analysts. Further analysis demonstrates that lower synchronicity is associated with cross‐sectional variation in the use of call provisions an… Show more
“…Devos et al (2015) examine the market response to analyst recommendation revisions across firms with high and low stock return synchronicity and find that low synchronicity stocks are associated with a less informative environment. Hao et al (2018) reach a similar conclusion based on their evidence on corporate debt securities characteristics. In sum, this emerging body of literature provides evidence opposite to the conventional view that low synchronicity reflects informed prices, and suggests the quality of the information environment is positively associated with stock price synchronicity.…”
The interpretation of stock price synchronicity in relation to price informativeness is controversial in the literature. We examine how firm‐specific variation relates to the quality of a firm's information environment by considering two auditor characteristics—audit firm size and audit firm tenure. Using a sample of U.S. listed firms from 2000 to 2018, we find that Big N audits and longer audit firm tenure are associated with higher stock price synchronicity and lower idiosyncratic risk. Our findings suggest that firm‐specific variation captures noise rather than firm‐specific news, supporting the emerging view that stock price synchronicity is a direct measure of price informativeness.
“…Devos et al (2015) examine the market response to analyst recommendation revisions across firms with high and low stock return synchronicity and find that low synchronicity stocks are associated with a less informative environment. Hao et al (2018) reach a similar conclusion based on their evidence on corporate debt securities characteristics. In sum, this emerging body of literature provides evidence opposite to the conventional view that low synchronicity reflects informed prices, and suggests the quality of the information environment is positively associated with stock price synchronicity.…”
The interpretation of stock price synchronicity in relation to price informativeness is controversial in the literature. We examine how firm‐specific variation relates to the quality of a firm's information environment by considering two auditor characteristics—audit firm size and audit firm tenure. Using a sample of U.S. listed firms from 2000 to 2018, we find that Big N audits and longer audit firm tenure are associated with higher stock price synchronicity and lower idiosyncratic risk. Our findings suggest that firm‐specific variation captures noise rather than firm‐specific news, supporting the emerging view that stock price synchronicity is a direct measure of price informativeness.
“…Diamond and Kuan (2018) adopted the Corwin and Schultz (2012) bid-ask spread estimator to investigate the cost to investors of changes in U.S. stock market regulations aimed at diminishing the risks caused by highfrequency trading. Hao, Prevost, and Wongchoti (2018) found asymmetric information is a relevant factor in the negative association between stock prices' low synchronicity and cost of debt in a large sample of corporations.…”
This paper has the goal of analyzing the association between asymmetric information, measured by Corwin-Schultz bid ask spread estimator, and stock prices in the Brazilian stock market. Daily data from 64 corporations over a period of 10 years were examined using the Johansen-Fisher panel cointegration technique in order to assess the validity of asymmetric information measurements in shorter periods than in previous studies. The results indicate that asymmetric information anticipates stock prices over a period of up to two days in a theoretically consistent way. Future research may control the results via traditional finance variables.
“…as measures for R2 to be considered as substantial, moderate, and weak, respectively. In Social studies R2 value is usually very low and weakest values is to be high relatively (Colton & Bower, 2002;Hair et al, 2011;Hao, Prevost, & Wongchoti, 2018). R2 values were 0.29 for the adoption, whereas 0.24 for the creation, and these values are accepted by consumer behavior research standards (Kock, 2017).…”
Section: Assessment Of Model Using Pls-semmentioning
This paper aims to investigate the effect innovation barriers has on the innovation orientation in the Syrian construction firms in the period of the war years. The effect of 8 different barriers were investigated: Technical, Financial, Process, Psychological, Management, Culture, Environmental and Governmental barriers. Questionnaire data were collected from a sample of 306 architects and Civil engineers from large, small and medium sized construction firms, which operated in Syria within the past 6 years of the war. The results from total sample community confirmed only 9 hypotheses out of 16, confirming the full significant effect of the Technical, Financial, Process and Psychological Barriers had on both innovation orientations-(Creation & Adoption), Whereas, environmental Barrier significant effect only on the Creation innovation orientation. This paper illustrates the assessment of the measurement and structural model using Partial Least Squares-Structural Equation Modelling PLS-SEM (Warp PLS 6.0 software). The study contributes theoretically and methodologically to the innovation barriers literature in specific and innovation literature in general. Moreover, the result can assist the local firms and authorities in understanding the barriers structure and guide them for future developments and improvements that are disparately needed for the era of the rebuilding the country after the war.
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