Effects of Financial Market Information on Firms' Productivity Under Operating Pressure and Financial Constraints

Evidence From the Chinese Stock Market

Bibliographic Data

ID3296993
AuthorsF Lai (0000-0002-2274-8605, Yunnan University of Finance And Economics), Sha Zhu (0000-0002-3835-8492, Yunnan University of Finance And Economics, corresponding author), Qingxiang Feng (0000-0001-8573-3833, Sun Yat-sen University), Yi Yao (0000-0003-2020-8565, Renmin University of China)
Year2021
Volume11
Issue4
Publication date2021-10-01
Open AccessYes
TypeARTICLE
VenueSAGE Open (JOURNAL)
Journal identifiersISSN: 2158-2440 • E-ISSN: 2158-2440
PublisherSAGE Publications Inc (PUBLISHER)
DOI10.1177/21582440211061377
OpenAlexW3216671722
LanguageEN
Citations received2
References cited69

Many studies have examined the impact of economic fundamentals on the financial market, but few have explored how financial market information affects the real economy. In this paper, we examine the effects of stock price informativeness on firms' total factor productivity (TFP) using panel data of Chinese listed manufacturing firms over the period 2007 to 2017. Specifically, we use stock price nonsynchronicity to measure stock price informativeness, and real economic activity efficiency is proxied by the listed firms' total factor productivity estimated by the LP and ACF methods. We find that stock price informativeness is positively associated with firms' productivity in China. More importantly, we propose two possible mechanisms to intensify the consequences of stock price informativeness and find that operating pressure and financial constraints can positively intensify the relationship between stock price informativeness and firms' TFP. As financial information is crucial for sustainable and steady economic growth, our research not only helps to reveal how the financial market promotes economic growth but also helps to provide new ideas for managers and policy-makers to alleviate operating pressure and financing constraints

Business · Econometrics · Economics · Financial market · Macroeconomics · Monetary economics · Panel data · Productivity · Stock market · Total factor productivity · Corporate Finance and Governance · Financial Markets and Investment Strategies · Market Dynamics and Volatility · Finance

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Open DOIOpen Access