A growing literature is using stock return synchronicity, or the R2 from a market model regression,as an inverse measure of the extent to which firm-specific information is reflected in stock prices. Inthis paper, we argue that the relationship between R2 and the informativeness of stock prices...

Rhodes-Kropf and Viswanathan (2004) suggest an adverse selection role of corporate cashreserve. Specifically, if investors know a bidder does not have to issue to invest, an attempt to doso sends a strong pessimistic signal of overvaluation. Despite its intuitiveness, this notion has notbeen...

We find that the decision by a potential acquirer to complete or cancel an announced acquisition proposal is sensitive to new information generated after the announcement of the acquisition. Both the acquirer and target's cumulative abnormal returns (CAR) over different windows after the...

Hou (2007) finds that within an industry, stock returns of larger firms lead those of smaller firms, suggesting an intra-industry information diffusion process. Most industry leaders, however, have business segments in other industries (henceforth, minor-segment industries), whereas most small...

This paper argues that, contrary to the conventional wisdom, stock return synchronicity (or <italic>R</italic>²) can increase when transparency improves. In a simple model, we show that, in more transparent environments, stock prices should be more informative about future events. Consequently, when the events...

A cash-rich company is less likely to be a bidder during 1994-2008 in the US, contrasting the findings based on earlier sample period. This is mainly due to the companies with high residual market-to-book ratios (i.e. the residual of the actual market-to-book ratio regressed on measures of...