Global geopolitical risk and stock price informativeness

Fujun Lai, Fuxiang Wang, Yunzhong Li and Wai Yan Shum

Economic Analysis and Policy, 2025, vol. 87, issue C, 2279-2297

Abstract: This study uses a sample of Chinese listed companies from 2007 to 2021 to investigate the impact of global geopolitical risk (GPR) on stock price informativeness. Our paper finds that GPR significantly reduces stock price informativeness. We propose herding behavior as a potential mechanism. When GPR is elevated, investors may become more sensitive to the actions of others, resulting in a reduction in stock price informativeness. We also find that the impact of GPR on stock price informativeness is more pronounced for companies with poorer information environments, overseas operations, unfavorable market conditions, and lower institutional investor ownership. Further analysis reveals that unexpected GPR can reduce stock price informativeness, whereas expected GPR may actually increase stock price informativeness. Our study is of significant value to policymakers and investors in addressing GPR, as it helps optimize investment decisions and enhance market efficiency.

Keywords: Global geopolitical risk; Unexpected GPR; Expected GPR; Stock price informativeness; Herding effect (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0313592625003303
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:87:y:2025:i:c:p:2279-2297

DOI: 10.1016/j.eap.2025.08.010

Access Statistics for this article

Economic Analysis and Policy is currently edited by Clevo Wilson

More articles in Economic Analysis and Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().