Does inflation affect sensitivity of investment to stock prices? Evidence from emerging markets
Author's Department
Management Department
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sciencedirect.com/science/article/abs/pii/S1544612316303087
Document Type
Research Article
Publication Title
Finance Research Letters
Publication Date
12-31-2018
doi
10.1016/j.frl.2017.10.019
Abstract
This paper uses data from 37 emerging markets and shows that investment of firms headquartered in countries with higher inflation is significantly less sensitive to their stock prices than that of firms headquartered in countries with lower inflation. We argue that stock prices are less informative in countries with high inflation. As a result, managers are less likely to use stock prices in their investment decisions, thereby lowering sensitivity of investment to stock prices in countries with higher inflation.
First Page
160
Last Page
164
Recommended Citation
APA Citation
Ahmed, N.
(2018). Does inflation affect sensitivity of investment to stock prices? Evidence from emerging markets. Finance Research Letters, 25, 160–164.
10.1016/j.frl.2017.10.019
https://fount.aucegypt.edu/faculty_journal_articles/176
MLA Citation
Ahmed, Neveen
"Does inflation affect sensitivity of investment to stock prices? Evidence from emerging markets." Finance Research Letters, vol. 25, 2018, pp. 160–164.
https://fount.aucegypt.edu/faculty_journal_articles/176