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Financial Literacy and Stock Price Informativeness: a Cross-Country Study

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  • Todea Anita

    (Babeș-Bolyai University, Romania)

Abstract

This paper examines the impact of financial literacy on stock price informativeness in a sample of firms from 20 countries. Using four measures of stock price informativeness, we find a significant relationship between higher financial literacy and higher stock price informativeness. The individual investors’ contribution regarding the incorporation of specific information into stock prices includes private information also and not mere specific information in the general sense. Financial knowledge is the key element that helps individual investors to incorporate specific information into stock prices.

Suggested Citation

  • Todea Anita, 2018. "Financial Literacy and Stock Price Informativeness: a Cross-Country Study," Studia Universitatis Babeș-Bolyai Oeconomica, Sciendo, vol. 63(1), pages 63-72, April.
    • Handle: RePEc:vrs:subboe:v:63:y:2018:i:1:p:63-72:n:4
    DOI: 10.2478/subboec-2018-0004
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    More about this item

    Keywords

    price informativeness; financial literacy; financial knowledge; firm-specific information; private information;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid

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