Document Type

Journal article

Source Publication

Management Science

Publication Date

7-2015

Volume

61

Issue

7

First Page

1630

Last Page

1647

Keywords

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

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.

DOI

10.1287/mnsc.2014.1911

Print ISSN

00251909

E-ISSN

15265501

Publisher Statement

Copyright © 2014, INFORMS

Access to external full text or publisher's version may require subscription.

Full-text Version

Accepted Author Manuscript

Recommended Citation

Firth, M., Wong, K. P., & Wong, S. M. L. (2015). Corporate transparency and the impact of investor sentiment on stock prices. Management Science, 61(7), 1630-1647. doi: 10.1287/mnsc.2014.1911