Information environment and stock price synchronicity: Evidence from auditor characteristics

Document Type

Article

Publication Date

7-1-2021

Abstract

The interpretation of stock price synchronicity in relation to price informativeness is controversial in the literature. We examine how firm-specific variation relates to the quality of a firm's information environment by considering two auditor characteristics—audit firm size and audit firm tenure. Using a sample of U.S. listed firms from 2000 to 2018, we find that Big N audits and longer audit firm tenure are associated with higher stock price synchronicity and lower idiosyncratic risk. Our findings suggest that firm-specific variation captures noise rather than firm-specific news, supporting the emerging view that stock price synchronicity is a direct measure of price informativeness.

Publication Title

International Journal of Auditing

First Page Number

332

Last Page Number

350

DOI

10.1111/ijau.12221

This document is currently not available here.

Share

COinS