Firm investment, stock prices and information asymmetry in Kenya

Abstract

Financial markets play an important role in the production and aggregation of information. An undisputed view in economics is that asset prices incorporate information from various sources including tra~ing itself (Grossman and Stiglitz, 1980). This information, including private information, acts as a signal to market participants which significantly influences individual and corporate investment decisions (Roll, 1986 and Dow & Gorton,