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China is the world's largest investor and greatest contributor to global economic growth by wide margins, and will … sustain this growth. This paper shows that China's stock market has a crucial role to play. Since the reforms of the last … decade, China's stock market has become as informative about future corporate profits as in the US. Moreover, though it is a …
Persistent link: https://www.econbiz.de/10013027692
Stock prices are more informative when the information has less social value. Speculators with limited resources making costly (private) information production decisions must decide to produce information about some firms and not others. We show that producing and trading on private information...
Persistent link: https://www.econbiz.de/10013159958
In a capitalist economy prices serve to equilibrate supply and demand for goods and services, continually changing to reallocate resources to their most efficient uses. However, secondary stock market prices, often viewed as the most 'informationally efficient' prices in the economy, have no...
Persistent link: https://www.econbiz.de/10012774997
This paper explains why investors are likely to be overconfident and how this behavioral bias affects investment decisions. Our analysis suggests that investor overconfidence can potentially generate stock return momentum and that this momentum effect is likely to be the strongest in those...
Persistent link: https://www.econbiz.de/10012775020
Equity market liberalizations are like IPOs, but they are IPOs of a country's stock market rather than of individual firms. Both are endogenous events whose benefits are limited by poor investor protection, agency costs, and information asymmetries. As for stock prices following an IPO, there...
Persistent link: https://www.econbiz.de/10012767766
Large institutional investors own an increasing share of the equity markets in the U.S. The implications of this development for financial markets are still unclear. The paper presents novel empirical evidence that ownership by large institutions predicts higher volatility and greater noise in...
Persistent link: https://www.econbiz.de/10012992142
We study how sophisticated investors, when faced with changes in information environment, adjust their information acquisition and trading behavior, and how these changes in turn affect market efficiency. We find that, after exogenous reductions of analyst coverage due to closures of brokerage...
Persistent link: https://www.econbiz.de/10012920367
We analyze a comprehensive sample of more than 10,000 U.S. OTC stocks. We provide much needed descriptive evidence on this market and show that the OTC market is a large, diverse, and dynamic trading environment with a rich set of regulatory and disclosure regimes, comprising venue rules and...
Persistent link: https://www.econbiz.de/10013077219
This paper is about the effectiveness of qualitative easing, a form of unconventional monetary policy that changes the risk composition of the central bank balance sheet with the goal of stabilizing economic activity. We construct a general equilibrium model where agents have rational...
Persistent link: https://www.econbiz.de/10012995518
compares the actual performance of markets in Europe and China, two regions of the world that were relatively advanced in the … findings suggest that relative levels of market function in China and Europe were similar prior to the Industrial Revolution …
Persistent link: https://www.econbiz.de/10013223801