Corporate transparency and the impact of investor sentiment on stock prices

Michael FIRTH, Kailong (Philip) WONG, Sonia ML WONG

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

14 Citations (Scopus)

Abstract

Using China's stock market as the testing venue, this study examines how corporate transparency helps explain the sensitivity of stock prices to general investor sentiment. We find that firms with low corporate transparency, measured by a battery of proxies including state ownership, the prevalence of related party transactions, accrual-based earnings management, audit opinions, and the quality of audit firms, are more affected by investor sentiment than are firms with high corporate transparency. Overall, our findings highlight the importance of corporate transparency in mitigating the effects of investor sentiment on stock prices.
Original languageEnglish
Pages (from-to)1630-1647
Number of pages18
JournalManagement Science
Volume61
Issue number7
Early online date2 Jul 2014
DOIs
Publication statusPublished - Jul 2015

Fingerprint

Stock prices
Investor sentiment
Corporate transparency
Earnings management
China's stock market
Related party transactions
Audit firms
Audit opinion
State ownership
Testing

Bibliographical note

Michael Firth acknowledges financial support form the Government of the Hong Kong Special Administrative Region [LU340209].

Keywords

  • China
  • corporate transparency
  • emerging market
  • investor sentiment
  • stock prices

Cite this

FIRTH, Michael ; WONG, Kailong (Philip) ; WONG, Sonia ML. / Corporate transparency and the impact of investor sentiment on stock prices. In: Management Science. 2015 ; Vol. 61, No. 7. pp. 1630-1647.
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Corporate transparency and the impact of investor sentiment on stock prices. / FIRTH, Michael; WONG, Kailong (Philip); WONG, Sonia ML.

In: Management Science, Vol. 61, No. 7, 07.2015, p. 1630-1647.

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

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