TY  - JOUR
AU  - Chari,Anusha
AU  - Henry,Peter Blair
TI  - Firm-Specific Information and the Efficiency of Investment
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12186
PY  - 2006
Y2  - May 2006
UR  - http://www.nber.org/papers/w12186
L1  - http://www.nber.org/papers/w12186.pdf
N1  - Author contact info:
Anusha Chari
301 Gardner Hall
CB#3305, Department of Economics
University of North Carolina at Chapel Hill
Chapel Hill, NC 27599
Tel: 919/966-5346
E-Mail: achari@unc.edu

Peter Blair Henry
Stern School of Business
New York University
44 West 4th Street, 11-58
New York, NY 10012
Tel: 212/998-0909
E-Mail: pbhenry@stern.nyu.edu
M2  - featured in NBER digest on 2006-05-01
AB  - We use a new firm-level dataset to examine the efficiency of investment in emerging economies.  In the three-year period following stock market liberalizations, the growth rate of the typical firm's capital stock exceeds its pre-liberalization mean by an average of 5.4 percentage points.  Cross-sectional changes in investment are significantly correlated with the signals about fundamentals embedded in the stock price changes that occur upon liberalization.  Panel data estimations show that a 1-percentage point increase in a firm's expected future sales growth predicts a 4.1-percentage point increase in its investment; country-specific changes in the cost of capital predict a 2.3-percentage point increase in investment; firm-specific changes in risk premia do not affect investment.
ER  -