Information asymmetry, east–west cultural differences, and divergence in investor reactions

Lee, Seungho; Walker, Thomas; Zhang, Aoran; Zhao, Yunfei

Abstract

This paper investigates the divergence in investor behaviour between the United States and China following the abolition of the Chinese presidential term limit in 2018, which may, in part, have reflected the heterogeneous opinions expressed in public online media regarding this event. Compared with Chinese investors, the sentiment among US investors was considerably more pessimistic. Accordingly, we find that Chinese companies listed in the United States significantly underperformed relative to a sample of propensity score-matched firms listed in China. Additionally, we find that the political connectedness of firms to the Chinese government strongly influenced the stock prices of US-listed Chinese firms.

Citation

Lee, S., Walker, T., Zhang, A., & Zhao, Y. (2023). Information asymmetry, east–west cultural differences, and divergence in investor reactions. European Financial Management, 29(4), 1191-1217. https://doi.org/10.1111/eufm.12388

• Journal Article Type: Article
• Acceptance Date: Jul 15, 2022
• Online Publication Date: Aug 9, 2022
• Publication Date: 2023-09
• Deposit Date: Jul 27, 2022
• Publicly Available Date: Aug 10, 2024
• Journal: European Financial Management
• Print ISSN: 1354-7798
• Electronic ISSN: 1468-036X
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• Volume: 29
• Issue: 4
• Pages: 1191-1217
• DOI: https://doi.org/10.1111/eufm.12388
• Keywords: General Economics, Econometrics and Finance; Accounting
• Public URL: https://nottingham-repository.worktribe.com/output/9404895
• Publisher URL: https://onlinelibrary.wiley.com/doi/10.1111/eufm.12388