The Empirical Research Of Corporate Strategic Deviance And Stock Volatility

With the development of economy,the innovation of business models and strategies of economic entities emerges in an endless stream.The differentiated strategies have become an important way for companies to gain competitive advantages.The strategies determine the companies’ daily business,which will ultimately affect the companies’ future development prospects and cash flow distribution.Therefore,this paper believes that the companies’ strategies may be the deeper reason for the fluctuations of individual stock price.Based on the perspective of information asymmetry,this paper examines the relationship between strategic deviance and stock price volatility and empirically proves that the increase of strategic deviance will aggravate stock price volatility.The paper proves that information asymmetry is the internal mechanism that affects the relationship between strategic deviance and stock volatility and analysts as information mediation play a role in easing information asymmetry.This paper collects Shanghai and Shenzhen A-share samples from 2001 to 2017 and draw on the measurement of strategy deviance by Ye Kangtao et al.(2013)to explore the relationship between companies’ strategic deviance and stock price volatility.The results suggest that the greater strategic deviance the companies have,the higher stock price volatilities happen during the year.Further,through the mediating effect test,this paper finds that the positive influence of the company’s strategic deviance on stock price volatility is partly achieved through the mediation effect of information asymmetry,that is,the higher strategic deviance companies pursue,the higher the information asymmetry investors will face and higher information asymmetry will exacerbates stock price volatility eventually.The specific mechanism is that companies’ strategic deviance and information asymmetry have intrinsic association.Companies that pursue differentiated strategies adopt development strategies different from the industry routines,which significantly increase the information acquisition cost for investors and also increase difficulties for outsiders to judge companies’ future business conditions,thereby increasing information uncertainty and information asymmetry and reducing the speed of information absorbed into stock prices.When the market lacks sufficient information to reflect the intrinsic value of the company,the possibility that the stock price deviates from its intrinsic value greatly increases and the price volatility will be increased when stock price returns to its intrinsic value.In addition,this paper introduces analysts’ attention as moderator variable and the results show that analysts indeed play a role in mitigating information asymmetry and stabilizing stock price volatility,which also confirms this article’s argument that it is the information that affects the positive relationship between strategic deviance and stock price volatility.This paper uses the OLS regression method to test research hypothesis.In the robust test,I adopt the company-level clustering regression,fixed effect model,instrumental variable method,Change Model and other methods to solve the possible endogeneity.The results are still robust.After substituting the explained variables,explanatory variables and moderator variables,the regression results are still robust.This paper innovatively studies the impact of corporate strategic deviance on stock price volatility and its internal mechanism from the perspective of information asymmetry and points out that analysts play a role in it.The possible contributions of this paper are: helping expand the existing literature on the economic consequences of strategic deviance,enriching the relevant literature in the field of stock price volatility and providing evidence supporting the cultivation and growth of analysts in China.