 Do corporate managers glean information from their stock prices? New evidence from China's strategic emerging industriesZhiwei Xu, Xuan Liu, Teng Zhang and Pengyue Ren Economic Modelling, 2024, vol. 141, issue C Abstract: Strategic emerging industries (SEIs) have become the pillar industries in China. However, prior studies argue that the Chinese stock market fails to adequately support the development of SEIs by primarily considering its financing function while ignoring its market feedback role. Based on data from 2007 to 2020, our study fills this gap by examining whether managers of Chinese SEI firms glean information from stock prices to guide their investment decisions. We find a significantly positive relationship between stock price informativeness (proxied by the volume-synchronized probability of informed trading) and investment-to-price sensitivity in the SEI firms only, indicating that managers of the SEI firms exhibit prominent learning behaviors. We further reveal that high growth prospects and high sensitivity of corporate fundamentals to macroeconomic factors contribute to the learning behaviors in China's SEIs. Our study sheds light on the role of the Chinese stock market in supporting the SEIs' evolution. Keywords: Managerial learning behavior; Strategic emerging industries; Stock price informativeness; Investment-to-price sensitivity (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:141:y:2024:i:c:s0264999324002311 DOI: 10.1016/j.econmod.2024.106874 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
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