The Impact of Business Group Affiliation on Stock Price Informativeness: Evidence from an Emerging Market

26 Pages Posted: 5 Apr 2019

See all articles by A. Melih Küllü

A. Melih Küllü

University of Central Florida

Doug Dyer

Texas A&M University - College of Business and Technology

Gokhan Yilmaz

Independent

Zenu Sharma

St John's University; Rensselaer Polytechnic Institute

Date Written: May 2019

Abstract

This paper examines the relationship between business group affiliation and stock price informativeness in an emerging market setting. We use stock price synchronicity as a measure, and study the impact of group affiliation ‐specifically the extent of affiliation, ownership structure and existence of group bank‐ on firm specific information content. Results reveal that the amount of firm‐specific information capitalized into stock prices tends to be lower (higher) when the firm is group‐affiliated (unaffiliated), indirectly (directly) owned, and affiliated group has (does not have) a group bank. Additionally, the extent of group affiliation maintains a non‐linear relationship with synchronicity, suggesting that the perception of higher versus lower levels of group ownership differs.

Keywords: business groups, emerging markets, information content, synchronicity, Turkey

JEL Classification: G14, G15, G20, G34

Suggested Citation

Küllü, A. Melih and Dyer, Doug and Yilmaz, Gokhan and Sharma, Zenu, The Impact of Business Group Affiliation on Stock Price Informativeness: Evidence from an Emerging Market (May 2019). Financial Markets, Institutions & Instruments, Vol. 28, Issue 2, pp. 187-212, 2019, Available at SSRN: https://ssrn.com/abstract=3367151 or http://dx.doi.org/10.1111/fmii.12111

A. Melih Küllü (Contact Author)

University of Central Florida ( email )

4000 Central Florida Blvd
Orlando, FL 32816-1400
United States

Doug Dyer

Texas A&M University - College of Business and Technology ( email )

Commerce, TX 75429-3011
United States

Gokhan Yilmaz

Independent ( email )

Zenu Sharma

St John's University ( email )

8000 Utopia Pkwy
Queens, NY 11439
United States
7189905496 (Phone)

Rensselaer Polytechnic Institute ( email )

Troy, NY 12180
United States

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