The impact of business group affiliation on stock price informativeness: Evidence from an emerging market

This paper examines the relationship between business group affiliation and stock price informativeness in an emerging market setting. We use stock price synchronicity as a measure, and study the impact of group affiliation -specifically the extent of affiliation, ownership structure and existence of group bank- on firm specific information content. Results reveal that the amount of firm-specific information capitalized into stock prices tends to be lower (higher) when the firm is group-affiliated (unaffiliated), indirectly (directly) owned, and affiliated group has (does not have) a group bank. Additionally, the extent of group affiliation maintains a non-linear relationship with synchronicity, suggesting that the perception of higher versus lower levels of group ownership differs.