Information ambiguity and its effect on stock price synchronicity during the life cycle stages of companies

Subject Areas : Investments

Gholamreza Askarzadeh ¹ , Omid Kargarshooroki ²

1 - Department of Finance, Yazd Branch, Islamic Azad University, Yazd, Iran.
2 - Department of Finance, Yazd Branch, Islamic Azad University, Yazd, Iran.

Received: 2023-11-21 Accepted : 2024-09-15 Published : 2024-09-15

Keywords: Company Life Cycle, Information Ambiguity, Stock Price Synchronicity,

Abstract :

Objective: Information asymmetry between managers and shareholders has always been a concern for investors and capital market participants. This study aims to examine the impact of information ambiguity on stock price synchronicity across different stages of companies' life cycles.

Research Methodology: The research design is quasi-experimental, utilizing an ex-post facto approach (through historical data). This study employs multiple regression modeling, and the data analysis is based on historical financial statements of companies from 2013 to 2022. Research data was collected from actual figures and information in financial statements of companies listed on the Tehran Stock Exchange through the Codal website. This study follows an applied research approach, and its results will be applicable for managers, investors, and other specialists in capital market analysis.

Findings: The results from testing research hypotheses indicated that information ambiguity has a significant inverse effect on stock price synchronicity. Furthermore, the findings showed that this impact varies across different company life cycle stages; specifically, the effect is strongest during the growth stage and lesser in other stages (maturity and decline). These results suggest that during the maturity stage, company information ambiguity is very low, and stock price synchronicity is higher.

Originality/Scientific Value Added: The findings of this research will be highly valuable for managers, investors, analysts, and regulatory bodies, and can contribute to reducing stock transaction costs, improving market efficiency, increasing liquidity, and ultimately enhancing trading profits.

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