Big Data as a Governance Mechanism

By Christina Zhu. The Review of financial studies, 2019

320 citations recorded by the source corpus.

This study empirically investigates two effects of alternative data availability: stock price informativeness and its disciplining effect on managers’ actions. Recent computing advancements have enabled technology companies to collect real-time, granular indicators of fundamentals to sell to investment professionals. These data include consumer transactions and satellite images. The introduction of these data increases price informativeness through decreased information acquisition costs, particularly in firms in which sophisticated investors have higher incentives to uncover information. I document two effects on managers. First, managers reduce their opportunistic trading. Second, investment efficiency increases, consistent with price informativeness improving managers’ incentives to invest and divest efficiently.Received June 1, 2017; editorial decision June 1, 2018 by Editor Wei Jiang. The Author has furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Subfields: Accounting, Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/8065484c20a0b972f2c73531513361550ee9c194

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Citations in the corpus

To FinTech and Beyond (2019, unknown): “Two papers, Zhu (2019) and Chen, Wu, and Yang (2019), applied big-data techniques to provide new insights to FinTech-related research questions.”
The effects of financial reporting and disclosure on corporate investment: A review (2019, background): “44 In his textbook, Zimmerman (2013) provides some justification for why managerial and financial accounting systems are closely aligned in many firms.”