How Do Investment, Fundamentals, and Stock Prices Relate Around the World?

Matías Braun*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Scopus citations


We assemble a novel data set of industry panel data for the corporate sector and the entire economy across a number of countries to explore the connection between investment and stock prices. The link is present in all samples, in both the aggregate and industry dimensions, and increases with stock market development. Fundamentals are less related to prices in underdeveloped markets but are similarly related to investment everywhere. Thus, the active informant interpretation does not seem to be the main force behind the stock market–investment relationship. In addition, industries that are more dependent on equity finance, and where investors are strongest, exhibit higher sensitivity to prices, especially in developed markets.

Original languageEnglish
Pages (from-to)2772-2789
Number of pages18
JournalEmerging Markets Finance and Trade
Issue number12
StatePublished - 1 Dec 2016

Bibliographical note

Publisher Copyright:
Copyright © Taylor & Francis Group, LLC.


  • allocation
  • cross-country
  • financial development


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