Corporate Strategy, Conformism, and the Stock Market

• 成果类型: Article
• 署名作者: Foucault, Thierry; Fresard, Laurent
• 署名单位: Hautes Etudes Commerciales (HEC) Paris; Universita della Svizzera Italiana; Swiss Finance Institute (SFI); University System of Maryland; University of Maryland College Park
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhy077
• 发表日期: 2019
• 页码: 905
• 关键词: PRICE INFORMATIVENESS; INVESTMENT SENSITIVITY; financial-markets; capital structure; FIRMS; PRIVATE; COMPETITION; decisions; liquidity; feedback

摘要

We show that product differentiation reduces the informativeness of a firm's stock price (or its peers' stock prices) about the value of its growth opportunities. This results in less efficient exercise of a firm's growth options when managers rely on information in stock prices for their decisions. This informational cost of differentiation induces conformity in product market strategies and is larger for private firms. Hence, a firm should differentiate more after going public. We confirm this prediction empirically and show that the post-IPO increase in differentiation is stronger for firms with better informed managers or less informative peers' stock prices. Received January 19, 2016; editorial decision May 8, 2018 by Editor Itay Goldstein. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.