Does the stock market affect firm investment in China? A price informativeness perspective

Managerial ownership, corporate governance and firms' exporting decisions: evidence from Chinese listed companies

“…Similarly, the coefficient on the capital intensity ratio is negative, but not statistically significant 25 . The market-to-book ratio does not have a statistically significant association with exporting decisions, which is probably due to the fact that in the Chinese context, it is an imperfect measure of investment opportunities (Allen et al, 2005;Wang et al, 2009). This may be due to the fact that stock market-based measures of growth opportunities are not reliable in the Chinese financial markets (Wang et al, 2009;Conyon and He, 2012) 26 .…”

“…The market-to-book ratio does not have a statistically significant association with exporting decisions, which is probably due to the fact that in the Chinese context, it is an imperfect measure of investment opportunities (Allen et al, 2005;Wang et al, 2009). This may be due to the fact that stock market-based measures of growth opportunities are not reliable in the Chinese financial markets (Wang et al, 2009;Conyon and He, 2012) 26 . In line with , liquidity always attracts a positive and significant coefficient, suggesting that having more internal finance at hand facilitates firms' entry in export markets.…”

Control-ownership wedge and investment sensitivity to stock price

“…On the one hand, if stock prices contain little or no information about a firm's growth opportunities, its investment decisions do not respond to stock prices, then control-ownership wedge does not matter. For example, Wang et al (2009) find that corporate investments do not respond to stock prices in China, and the fact that stock prices contain little information about future growth opportunities is a possible reason. On the other hand, even if stock prices are highly informative, whether the firm's investments follow stock prices still depends on the interest alignment between controlling and minority shareholders.…”

Financial reforms and time-varying microstructures in emerging equity markets

“…By conveying information through price signals, they allow agents to diversify risks, thereby decreasing risk premia for domestically listed firms (Wang et al, 2009). Unbiased equity prices may also serve as a conduit for improved corporate governance when used as managerial incentives (Stulz, 1999).…”