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Short Interest And Corporate Investment: Evidence From Supply Chain Partners, Xia Chen, Guojin Gong, Shuqing Luo
Short Interest And Corporate Investment: Evidence From Supply Chain Partners, Xia Chen, Guojin Gong, Shuqing Luo
Research Collection School Of Accountancy
Short interest contains valuable information about a firm’s business fundamentals. We investigate whether such information affects business partners’ real investment decisions in the supply-chain setting. We predict and find that a supplier’s future investments (including inventory, R&D, and tangible asset investments) decrease with its customer’s current short interest. This negative relation is stronger when the supplier faces greater difficulty in assessing its customer’s business fundamentals and when short interest is more likely to indicate longlasting deterioration in the customer’s fundamentals. Additional analysis does not support the alternative explanation that the supplier adjusts investments in response to unfavorable information obtained via …
The Equity-Financing Channel, The Catering Channel, And Corporate Investment: International Evidence, Yuanto Kusnadi, John K. C. Wei
The Equity-Financing Channel, The Catering Channel, And Corporate Investment: International Evidence, Yuanto Kusnadi, John K. C. Wei
Research Collection School Of Accountancy
We examine how stock market mispricing affects corporate investment in an internationalsetting. We find that investment is more sensitive to stock prices for equity-dependent firms thanfor non-equity-dependent firms in our international sample. Investment is also more sensitive tostock prices for firms located in countries with more developed capital markets (i.e., lower costsof raising capital), higher share turnover (i.e., shorter shareholder horizons), and higher R&Dintensity (i.e., more opaque assets). More importantly, the positive relation between equitydependence and the sensitivity of investment to stock prices is more pronounced for firmslocated in these same countries. These findings are consistent with the equity-financinghypothesis and …
The Equity-Financing Channel, The Catering Channel, And Corporate Investment: International Evidence, Yuanto Kusnadi, K.C. John Wei
The Equity-Financing Channel, The Catering Channel, And Corporate Investment: International Evidence, Yuanto Kusnadi, K.C. John Wei
Research Collection School Of Accountancy
We examine how stock market mispricing affectscorporate investment in an international setting. We find that investment ismore sensitive to stock prices for equity-dependent firms than for non-equity-dependentfirms in our international sample. Investment is also more sensitive to stockprices for firms located in countries with more developed capital markets (i.e.,lower costs of raising capital), higher share turnover (i.e., shortershareholder horizons), and higher R&D intensity (i.e., more opaque assets). More importantly, the positive relation between equitydependence and the sensitivity of investment to stock prices is more pronouncedfor firms located in these same countries. These findings are consistent withthe equity-financing hypothesis and the …