Corporate Ownership, Governance and Timeliness of Price Discovery

Abstract

This paper examines how corporate ownership and governance relate to the timeliness of price discovery, referred to as the speed of incorporation of value-relevant information into the stock price. Using a panel data of 1,138 Australian firm-year observations from 2001 to 2008, we predict and find a non-linear relationship between ownership concentration and the timeliness of price discovery. Although there is a positive association between corporate governance and the timeliness of price discovery, we find no evidence of an interaction effect between corporate governance and ownership concentration. Of the various identity groups of largest shareholders examined, only family-controlled firms exhibit more timely price discovery. Having a second largest shareholder does not materially affect the timeliness of price discovery.