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- W2022275617 abstract "This study examines whether insiders’ incentives for private control benefits affect investment sensitivity to stock price. While Chen et al. (2007) link stock price informativeness to firms’ learning from the stock market, we offer an alternative agency-cost based explanation. Using a total of 2822 firms from 22 countries in East Asia and Western Europe, we document a strong negative association between control-ownership wedge and investment-q sensitivity, suggesting that insiders’ incentives for private control benefit reduce their propensity to listen to the market. Furthermore, the negative impact of wedge on investment-q sensitivity is primarily driven by sub-optimal investments. Overall, we provide evidence that agency problem is an important factor that determines the learning from the stock market in capital allocation." @default.
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- W2022275617 date "2011-11-01" @default.
- W2022275617 modified "2023-10-11" @default.
- W2022275617 title "Control-ownership wedge and investment sensitivity to stock price" @default.
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- W2022275617 doi "https://doi.org/10.1016/j.jbankfin.2011.03.017" @default.
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