Oil price uncertainty and stock price informativeness: Evidence from investment-price sensitivity in China

Qi Zhu, Sisi Jin, Yuxuan Huang, Cheng Yan and Chuanglian Chen

International Review of Financial Analysis, 2022, vol. 84, issue C

Abstract: We study the effects of oil price uncertainty (OPU) on stock price informativeness based on investment-price sensitivity. Using Chinese stocks from 2008 to 2021, we find a negative relationship between OPU and the strength of Tobin's q (a standardized measure of prices) for predicting investment opportunities. This finding is likely due to the crowding out of informed investors rather than the financial constraints brought by a higher cost of capital. Investment-price sensitivity also decreases more among firms in less-competition, high sales volatility, and lower analysts' attention. What is more, the reduction in investment-price sensitivity is more concentrated in public utilities, agriculture & livestock, and industry instead of in real estate or commerce industries. These findings indicate that OPU decreases the acquisition of information related to firms, and consequently, price informativeness for future investment decisions.

Keywords: OPU; Stock price informativeness; Investment; Tobin's q; Managerial learning (search for similar items in EconPapers)
JEL-codes: G12 G14 M40 M41 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:84:y:2022:i:c:s1057521922003271

DOI: 10.1016/j.irfa.2022.102377

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