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Effect of Geographical Diversification on Informational Efficiency in Malaysia

Author

Listed:
  • Suan Poh

    (Universiti Sains Malaysia)

  • Chee wooi Hooy

    (Universiti Sains Malaysia)

  • Kian-ping Lim

    (Universiti of Malaya)

Abstract

This study examines the effect of geographic diversification on informational efficiency. Four types of geographical diversification indicators are used to capture different degrees geographical diversification of a firm. By using panel data of more than 250 public listed firms in Malaysia across 11 industries for 8 years, most geographical diversification indicators show significant and positive relationship with local and global delay measures. For robustness test, this study investigates the biased result caused by unobserved time and firm effects by clustering the standard errors by firm, time and both dimensions, respectively. To further manifest the effect of investor recognition hypothesis, dummy of KLCI index is introduced as moderator to geographical diversification indicators and shows negative and significant relationship with global delay measure.

Suggested Citation

  • Suan Poh & Chee wooi Hooy & Kian-ping Lim, 2017. "Effect of Geographical Diversification on Informational Efficiency in Malaysia," Economics Bulletin, AccessEcon, vol. 37(1), pages 19-29.
    • Handle: RePEc:ebl:ecbull:eb-16-00749
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    Informational efficiency; Price delay; Geographical diversification; Malaysia;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • F2 - International Economics - - International Factor Movements and International Business

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