Title: | Firm-Specific Information and the Efficiency of Investment |
Authors: | Henry, Peter Chari, Anusha |
Issue Date: | Jan-2007 |
Publisher: | Center on Democracy, Development, and Rule of Law |
Abstract: | We use a new firm-level dataset to examine the efficiency of investment in emerging economies. In the three-year period following stock market liberalizations, the growth rate of the typical firm’s capital stock exceeds its pre-liberalization mean by an average of 5.4 percentage points. Cross-sectional changes in investment are significantly correlated with the signals about fundamentals embedded in the stock price changes that occur upon liberalization. Panel data estimations show that a 1-percentage point increase in a firm’s expected future sales growth predicts a 4.1-percentage point increase in its investment; country-specific changes in the cost of capital predict a 2.3-percentage point increase in investment; firm-specific changes in risk premia do not affect investment. |
URI: | http://hdl.handle.net/2451/31386 |
Appears in Collections: | Peter Henry's Collection |
Files in This Item:
File | Description | Size | Format | |
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PH Firm Specific Info.pdf | Peter Henry Firm-Specific Information and the Efficiency of Investment | 499.46 kB | Adobe PDF | View/Open |
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