Shareholder Coordination and Stock Price Informativeness

28 Pages Posted: 7 May 2018

See all articles by Incheol Kim

Incheol Kim

University of Texas Rio Grande Valley (UTRGV) (Formerly University of Texas-Pan American) - College of Business and Entrepreneurship

Christos Pantzalis

University of South Florida

Bin Wang

Marquette University - College of Business Administration

Date Written: May/June 2018

Abstract

We show that firm‐specific information is more likely to be incorporated into stock prices when firms have stronger shareholder coordination. The premise of our work is that geographic proximity reduces communication costs among shareholders, thereby leading to better coordination. The positive coordination‐informativeness relation is driven mainly by shareholder coordination among dedicated and independent institutions. We further show that the positive effect is more pronounced for firms with weaker governance mechanisms, suggesting that shareholder coordination could serve as a substitute conduit of price discovery. Lastly, we propose that shareholder coordination improves stock price informativeness through the channel of enhanced voluntary disclosure quality.

Keywords: geographic proximity, shareholder coordination, stock price informativeness

Suggested Citation

Kim, Incheol and Pantzalis, Christos and Wang, Bin, Shareholder Coordination and Stock Price Informativeness (May/June 2018). Journal of Business Finance & Accounting, Vol. 45, Issue 5-6, pp. 686-713, 2018. Available at SSRN: https://ssrn.com/abstract=3173361 or http://dx.doi.org/10.1111/jbfa.12289

Incheol Kim (Contact Author)

University of Texas Rio Grande Valley (UTRGV) (Formerly University of Texas-Pan American) - College of Business and Entrepreneurship ( email )

1201 W University Dr
Edinburg, TX 78539
United States

Christos Pantzalis

University of South Florida ( email )

Tampa, FL 33620-5500
United States
(813) 974-3262 (Phone)

Bin Wang

Marquette University - College of Business Administration ( email )

P.O. Box 1881
Milwaukee, WI 53201-1881
United States

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