Stock Information Content And Corporate Value

Agency costs stem from information asymmetry,and any form of agency cost reduces company value.This paper takes China’s A-share listed companies from 2005 to 2017 as a sample,and uses the least squares estimation OLS model,fixed-effect FE model and Stochastic Frontier Approach(SFA)to explore the impact of stock price information on agency costs and company value,and the mechanism of the effect of stock price information on agency costs and company value.Under the empirical test of OLS least squares estimation and FE fixed effect model,the paper finds that the stock price information content significantly enhances the company’s value.Under the empirical test of the stochastic boundary approach(SFA),it is found that the stock price information content can significantly reduce the company’s agency cost.The results of the above empirical tests show that the stock price information content can increase the company’s value by reducing the agency cost.How does the stock price information content contribute to the agency cost?The stock price information content is the amount of company trait information reflected in the stock price.In order to verify whether the stock price information content can reduce the agency cost and enhance the company value by reducing the company information asymmetry,this paper selects three variables that can measure company information asymmetry degree in the empirical design,which are institutional investors’ shareholding ratio,stock liquidity and quality of information disclosure.Institutional investors have a significant supervisory role in management by virtue of their professional advantages,information advantages and capital advantages.They can reduce the degree of information asymmetry between management and shareholders(investors)by enhancing supervision of management and thus reducing Company agency costs;stock liquidity is considered to reduce agency costs by increasing the level of incentives for management;at the same time,the quality of information disclosure can reduce the company’s agency costs by directly reducing the degree of corporate information asymmetry.Therefore,the more institutional investors hold shares,the higher the liquidity of stocks,and the stronger the quality of information disclosure,the lower the degree of information asymmetry of the company.Therefore,the more institutional investors hold shares,the higher the liquidity of stocks,and the stronger the quality of information disclosure,the lower the degree of information asymmetry of the company.If the stock price information content can reduce the company’s agency cost by reducing the company’s information asymmetry,the stock price information content has a stronger effect on the company’s information asymmetry and agency cost when the company’s information asymmetry is high,which means,the more transparency company information is,the lower the degree of information asymmetry,the weaker the effect of stock price information on the company’s information asymmetry and agency costs,that is,the increase in institutional investors’ shareholding ratio,stock liquidity and information disclosure quality will weaken the stock information content to the company.Information asymmetry and the reduction of agency costs.In order to achieve better test results at the technical level,this part of the empirical research method selects the SFA.The empirical results show that when the stock price information content,the institutional shareholding ratio,and the intersection of the two are included the agency cost part of the SFA model(that is,the explanatory variable is the company’s agency cost,the explanatory variable is the stock price information content,etc.),the coefficient of content is significantly negative,indicating that the stock price information can significantly reduce the company’s information asymmetry and agency costs,and the coefficient of the cross-over item is significantly positive,indicating that as the proportion of the company’s shareholding increases,the company’s information asymmetry decreases,and the stock price information content’s reduction of company information asymmetry and agency cost is weakened;when the proxy cost component of the SFA model is added to the stock price information content,the stock index’s reverse index stock price illiquidity and the intersection of the two,the stock price information content’s coefficient is significantly negative,indicating that the stock information content can significantly reduce the company’s information asymmetry and agency costs,the coefficient of the intersection term is significantly negative,indicating that as the stock illiquidity increases,the company’s information asymmetry increases,the stock price information content’s reduction in agency costs are enhanced;When the stock price information content,the reverse index kv value of the information disclosure quality,and the intersection of the two are added to the proxy cost part of the stochastic boundary model,the coefficient of the stock price information content is significantly negative,indicating that the stock information content can significantly reduce company’s information asymmetry and the agency cost,the coefficient of the intersection term is significantly negative,indicating that as the quality of information disclosure decreases,the degree of information asymmetry of the company increases,and the effect of stock price information on the company’s information asymmetry and agency costs is enhanced.Based on the above empirical design and empirical results,this paper believes that the stock price information content can reduce the company’s agency cost by reducing the company’s information asymmetry.In terms of robustness test,this paper first uses trait volatility instead of stock price asynchronous to measure stock price information,and obtains the empirical result that is consistent with stock price non-synchronization to measure stock price information.Considering the existence of a causal endogenous problem between the stock price information content and the agency cost,the propensity score matching model(PSM)is used to screen out the non-high stock price information content similar to the high stock price information content.High and low information content companies and non-high stock price information companies are not affected by the company’s own agency costs,thus solving the endogeneity of the article.