Legal Protection, Equity Dependence and Corporate Investment: Evidence from around the World
In this paper, we investigate whether legal protection and the equity financing channel affect the relationship between corporate investment and stock prices in an international setting. We find that equity-dependent firms display larger sensitivity of corporate investment to stock prices, which is consistent with the equity-financing channel argument. In addition, firms in countries with stronger legal protection have corporate investment that is more sensitive to their stock prices. This relationship is found to be more pronounced for equity-dependent firms. Overall, our evidence complements the earlier finding by Baker et al. (2003) and does not support the notion that the stock market is just a sideshow.
Legal protection Equity dependence Corporate investment
Yuanto Kusnadi K.C. John Wei
Department of Finance Hong Kong University of Science and Technology Clear Water Bay, Kowloon, Hong Kong
国际会议
昆明
英文
1-43
2005-07-05（万方平台首次上网日期，不代表论文的发表时间）