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- Publisher Website: 10.1016/j.jcorpfin.2017.06.013
- Scopus: eid_2-s2.0-85021703841
- WOS: WOS:000413284700003
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Article: What do stock price levels tell us about the firms?
Title | What do stock price levels tell us about the firms? |
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Authors | |
Keywords | Future earnings O/S Price informativeness Stock price level Stock splits |
Issue Date | 2017 |
Publisher | Elsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jcorpfin |
Citation | Journal of Corporate Finance, 2017, v. 46, p. 34-50 How to Cite? |
Abstract | We hypothesize that high stock price levels impede informed trading on the stocks and reduce price informativeness. This is because uninformed trading is needed to facilitate informed trading, and high stock prices may impose budget constraints on uninformed investors. Indeed, we find, for high-price firms, (i) options to stock trading volume (O/S), an informed trading measure in options market, is higher, (ii) price informativeness about future earnings is lower, and (iii) investment sensitivity to price is lower. We also find these patterns reverse after stock splits, suggesting that firms can use splits to improve informed trading and enhance price informativeness. |
Persistent Identifier | http://hdl.handle.net/10722/243213 |
ISSN | 2023 Impact Factor: 7.2 2023 SCImago Journal Rankings: 3.182 |
ISI Accession Number ID |
DC Field | Value | Language |
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dc.contributor.author | Chan, K | - |
dc.contributor.author | LI, F | - |
dc.contributor.author | Lin, J | - |
dc.contributor.author | Lin, T | - |
dc.date.accessioned | 2017-08-25T02:51:43Z | - |
dc.date.available | 2017-08-25T02:51:43Z | - |
dc.date.issued | 2017 | - |
dc.identifier.citation | Journal of Corporate Finance, 2017, v. 46, p. 34-50 | - |
dc.identifier.issn | 0929-1199 | - |
dc.identifier.uri | http://hdl.handle.net/10722/243213 | - |
dc.description.abstract | We hypothesize that high stock price levels impede informed trading on the stocks and reduce price informativeness. This is because uninformed trading is needed to facilitate informed trading, and high stock prices may impose budget constraints on uninformed investors. Indeed, we find, for high-price firms, (i) options to stock trading volume (O/S), an informed trading measure in options market, is higher, (ii) price informativeness about future earnings is lower, and (iii) investment sensitivity to price is lower. We also find these patterns reverse after stock splits, suggesting that firms can use splits to improve informed trading and enhance price informativeness. | - |
dc.language | eng | - |
dc.publisher | Elsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jcorpfin | - |
dc.relation.ispartof | Journal of Corporate Finance | - |
dc.rights | Posting accepted manuscript (postprint): © <year>. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/ | - |
dc.subject | Future earnings | - |
dc.subject | O/S | - |
dc.subject | Price informativeness | - |
dc.subject | Stock price level | - |
dc.subject | Stock splits | - |
dc.title | What do stock price levels tell us about the firms? | - |
dc.type | Article | - |
dc.identifier.email | Lin, T: chunlin@hku.hk | - |
dc.identifier.authority | Lin, T=rp01077 | - |
dc.identifier.doi | 10.1016/j.jcorpfin.2017.06.013 | - |
dc.identifier.scopus | eid_2-s2.0-85021703841 | - |
dc.identifier.hkuros | 274164 | - |
dc.identifier.volume | 46 | - |
dc.identifier.spage | 34 | - |
dc.identifier.epage | 50 | - |
dc.identifier.isi | WOS:000413284700003 | - |
dc.publisher.place | Netherlands | - |
dc.identifier.issnl | 0929-1199 | - |