Earnings quality, stock price synchronicity, and foreign ownership: evidence of ASX200 firms
Pirzada, Kashan (2023) Earnings quality, stock price synchronicity, and foreign ownership: evidence of ASX200 firms. International Journal of Disclosure and Governance. ISSN 1741-3591
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Abstract
This study examines the impact of firms’ earnings quality on stock price synchronicity, considering the foreign equity ownership to moderate such a relationship. This study argues that firms’ earnings quality is firm-specific information that can enhance the stock price synchronicity in the market. The sample used is ASX200 firms in 2017–2019 period, excluding firms in Finance and Utility sectors. The data are collected from the databases FactSet and Morningstar. Using pooled regression analysis, this study shows that out of three market-based earnings quality attributes, timeliness significantly reduces information asymmetry, enhances transparency by impounding more firm-specific information in prices, and ultimately mitigates pricing errors in trading, hence lower stock price synchronicity. It supports prior studies showing that market impound the loss quicky. Meanwhile, conservatism and relevance show insignificant results, emphasizing the superiority of timeliness over other market-based earnings quality in the developed capital market. We discover that foreign equity ownership is not regarded as firm-specific information that reduce the stock price synchronicity. As a moderating variable, the foreign ownership level decreases the impact of timeliness on stock price synchronicity.
| Item Type: | Article | ||||||
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| Identification Number: | https://doi.org/10.1057/s41310-023-00210-7 | ||||||
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| Uncontrolled Keywords: | ASX, Earnings quality, Foreign ownership, Stock price synchronicity, Timeliness | ||||||
| Subjects: | CAH17 - business and management > CAH17-01 - business and management > CAH17-01-07 - finance CAH17 - business and management > CAH17-01 - business and management > CAH17-01-08 - accounting |
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| Divisions: | Faculty of Business, Law and Social Sciences > Birmingham City Business School | ||||||
| Depositing User: | Kashan Pirzada | ||||||
| Date Deposited: | 17 Nov 2023 16:06 | ||||||
| Last Modified: | 17 Nov 2023 16:06 | ||||||
| URI: | https://www.open-access.bcu.ac.uk/id/eprint/14956 |
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