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Non-financial information uncertainty, firm growth, and market value during crisis: Evidence from China

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  • Kong, Pengzhi
  • Cheng, Louis T.W.
  • Pan, Lulu
  • Shen, Jianfu
  • Yu, Qing

Abstract

This study investigates the impact of non-financial information uncertainty on market valuation during times of crisis. Using a sample of the largest listed firms in China and measuring non-financial information uncertainty through governance rating divergence, we find that firms with higher non-financial information uncertainty experienced a more significant and negative market reaction during the COVID-19 crisis compared to firms with low non-financial information uncertainty. Although stock prices of firms with robust growth opportunities are more resilient to the pandemic, non-financial information uncertainty mitigates the positive effect of firm growth on stock market reactions to the COVID-19 outbreak, indicating that corporate resilience to crisis is compromised by non-financial information uncertainty. A further analysis suggests that dual listing in mainland China and Hong Kong stock markets mitigates the negative effect of non-financial information uncertainty on stock market valuation, attributable to the higher quality of non-financial disclosure by these firms. Overall, this study sheds light on the unique role of non-financial information uncertainty in stock market valuation and stock price resilience during crises.

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  • Kong, Pengzhi & Cheng, Louis T.W. & Pan, Lulu & Shen, Jianfu & Yu, Qing, 2025. "Non-financial information uncertainty, firm growth, and market value during crisis: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 91(C).
    • Handle: RePEc:eee:pacfin:v:91:y:2025:i:c:s0927538x2500085x
    DOI: 10.1016/j.pacfin.2025.102748
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