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    Rights statement: This is the author’s version of a work that was accepted for publication in Journal of Financial Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Financial Economics, 136 (2), 2019 DOI: 10.1016/j.jfineco.2019.09.006

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Does the stock market make firms more productive?

Research output: Contribution to journalJournal articlepeer-review

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Does the stock market make firms more productive? / Bennett, Benjamin; Stulz, René; Wang, Jesse.

In: Journal of Financial Economics, Vol. 136, No. 2, 01.05.2020, p. 281-306.

Research output: Contribution to journalJournal articlepeer-review

Harvard

Bennett, B, Stulz, R & Wang, J 2020, 'Does the stock market make firms more productive?', Journal of Financial Economics, vol. 136, no. 2, pp. 281-306. https://doi.org/10.1016/j.jfineco.2019.09.006

APA

Bennett, B., Stulz, R., & Wang, J. (2020). Does the stock market make firms more productive? Journal of Financial Economics, 136(2), 281-306. https://doi.org/10.1016/j.jfineco.2019.09.006

Vancouver

Bennett B, Stulz R, Wang J. Does the stock market make firms more productive? Journal of Financial Economics. 2020 May 1;136(2):281-306. https://doi.org/10.1016/j.jfineco.2019.09.006

Author

Bennett, Benjamin ; Stulz, René ; Wang, Jesse. / Does the stock market make firms more productive?. In: Journal of Financial Economics. 2020 ; Vol. 136, No. 2. pp. 281-306.

Bibtex

@article{3893285959ce41d790788009214dede6,
title = "Does the stock market make firms more productive?",
abstract = "Management, directly or indirectly,learns from its firm{\textquoteright}s stock price, so a more informative stock price should make the firm more productive. We show that stock price informativeness increases firm productivity. We provide direct evidence of one channel through which stock price informativeness affects productivity; specifically, we find that CEO turnover is less sensitive to Tobin{\textquoteright}s q when informativeness is lower. We predict and confirm that the productivity of smaller and younger firms, better governed firms, more specialized firms, and firms with more competition is more strongly related to the informativeness of their stock price. We further address endogeneity concerns with the use of brokerage closures, S&P 500 additions, and mutual fund redemptions as plausibly exogenous events.",
keywords = "Stock price informativeness, TFP, Firm efficiency",
author = "Benjamin Bennett and Ren{\'e} Stulz and Jesse Wang",
note = "This is the author{\textquoteright}s version of a work that was accepted for publication in Journal of Financial Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Financial Economics, 136 (2), 2019 DOI: 10.1016/j.jfineco.2019.09.006",
year = "2020",
month = may,
day = "1",
doi = "10.1016/j.jfineco.2019.09.006",
language = "English",
volume = "136",
pages = "281--306",
journal = "Journal of Financial Economics",
issn = "0304-405X",
publisher = "Elsevier",
number = "2",

}

RIS

TY - JOUR

T1 - Does the stock market make firms more productive?

AU - Bennett, Benjamin

AU - Stulz, René

AU - Wang, Jesse

N1 - This is the author’s version of a work that was accepted for publication in Journal of Financial Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Financial Economics, 136 (2), 2019 DOI: 10.1016/j.jfineco.2019.09.006

PY - 2020/5/1

Y1 - 2020/5/1

N2 - Management, directly or indirectly,learns from its firm’s stock price, so a more informative stock price should make the firm more productive. We show that stock price informativeness increases firm productivity. We provide direct evidence of one channel through which stock price informativeness affects productivity; specifically, we find that CEO turnover is less sensitive to Tobin’s q when informativeness is lower. We predict and confirm that the productivity of smaller and younger firms, better governed firms, more specialized firms, and firms with more competition is more strongly related to the informativeness of their stock price. We further address endogeneity concerns with the use of brokerage closures, S&P 500 additions, and mutual fund redemptions as plausibly exogenous events.

AB - Management, directly or indirectly,learns from its firm’s stock price, so a more informative stock price should make the firm more productive. We show that stock price informativeness increases firm productivity. We provide direct evidence of one channel through which stock price informativeness affects productivity; specifically, we find that CEO turnover is less sensitive to Tobin’s q when informativeness is lower. We predict and confirm that the productivity of smaller and younger firms, better governed firms, more specialized firms, and firms with more competition is more strongly related to the informativeness of their stock price. We further address endogeneity concerns with the use of brokerage closures, S&P 500 additions, and mutual fund redemptions as plausibly exogenous events.

KW - Stock price informativeness

KW - TFP

KW - Firm efficiency

U2 - 10.1016/j.jfineco.2019.09.006

DO - 10.1016/j.jfineco.2019.09.006

M3 - Journal article

VL - 136

SP - 281

EP - 306

JO - Journal of Financial Economics

JF - Journal of Financial Economics

SN - 0304-405X

IS - 2

ER -