The influence of ownership structure, analyst following and institutional infrastructure on stock price informativeness: international evidence

Authors


  • We would like to thank Anne Wyatt (editor), an anonymous referee, Richard Chung, Michael Firth and Wayne Yu for their valuable comments. Jiang acknowledges the financial support from Hong Kong Polytechnic University (Grant No. G-U957). All errors remain the sole responsibility of the authors.

Abstract

Using firms from 20 non-US countries, we investigate whether and how ownership structure, analyst following and country-level institutions influence stock price informativeness (SPI). We find that stock price informativeness decreases with control-ownership wedge (the detachment of voting rights from cash flows rights), and this SPI-reducing effect of the wedge is attenuated for firms with high analyst following and in countries with strong country-level institutions. We also find that stock price informativeness decreases with analyst following, but this SPI-reducing effect of analyst following is attenuated in countries with strong country-level institutions.

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