GACR 15-13040S Accounting Earnings Quality, Insider Trading Profitability and Stock Price Informativeness
| Principal investigator: | Jiří Novák M.Sc., Ph.D., Deloitte Corporate Chair |
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| Description: | This project investigates whether and how quality of financial accounting information affects stock market efficiency. First, we will examine whether various characteristics of earnings quality affect information asymmetry between corporate insiders and outside investors. Large information asymmetry implies that investors do not have sufficient information to assess company value, which hinders efficient pricing. Second, we will analyze if a firm’s pre-commitment to a higher degree of financial statements verification through an independent audit enhances the efficiency of the price setting process. If a more thorough audit enhances the credibility of the financial statements, it allows investors to better assess the implications of accounting information, which should lead to more informative prices. Third, we will investigate whether insider trading enhances stock price informativeness by sending signals about managers’ optimism/pessimism that can be incorporated in stock prices by investors. |
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| Finance: | GACR |
| End date: | 31.12.2017 |
| Publications: | Corporate Governance Quality and a Firm’s Adaptation to Competitive Threats Signaling by Underpricing the Initial Public Offerings of Primary Listings in an Emerging Market Social stigma and executive compensation Systematic Risk Changes, Negative Realized Excess Returns and Time-Varying CAPM Beta |
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