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Title: How price informativeness affects the sensitivity of investment-to-stock price in Vietnamese listed firms

Authors: Quynh Trang Phan; Poomthan Rangkakulnuwat

Addresses: Ho Chi Minh City Open University, 35–37 Ho Hao Hon, District 1, Ho Chi Minh City, Vietnam ' School of Economics, University of the Thai Chamber of Commerce, Dindaeng, Bangkok 10400, Thailand

Abstract: This study investigates the relationship between the stock market and firm investment from a price informativeness perspective. Using an unbalanced panel dataset of Vietnamese listed firms from 2007 to 2017, the results show that stock market valuation is positively related to firm investment in both static and dynamic models. Moreover, the investment of firms with a higher level of price informativeness is likely less sensitive to their stock prices than that of firms with a lower level of price informativeness. In addition, the development of financial markets plays an important role in determining investment and investment-to-stock-price sensitivity. The regression results also show that the role of price informativeness in the investment-to-stock price relationship is not much different among groups of firms with high and low-quality auditors, as well as those with small and large firms.

Keywords: firm investment; stock market valuation; price informativeness; emerging markets.

DOI: 10.1504/AAJFA.2022.121767

Afro-Asian Journal of Finance and Accounting, 2022 Vol.12 No.1, pp.28 - 61

Received: 06 Jul 2019
Accepted: 23 Apr 2020

Published online: 07 Apr 2022 *

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