Oil price uncertainty and stock price informativeness: Evidence from listed U.S. companies

This paper examines the relationship between oil price uncertainty and stock price information for managerial decision making. Under the investment-q sensitivity framework, we use the data of listed U.S. companies from 2008 to 2020 and find that oil price uncertainty has a positive impact on investment-q sensitivity that is mainly driven by the crowding of informed traders and the promotion of managerial learning. The interrelation between oil price uncertainty and investment-q sensitivity is more remarkable for firms with uncorrelated product demand with that of their peers, stronger CEO concern, and greater CEO equity incentives. Furthermore, we provide evidence that oil price uncertainty can enhance investment-q sensitivity, especially for firms in highly oil-intensive industries and non-oil-producing states. Overall, our research illustrates how oil price uncertainty affects stock price informativeness for firms' decision making.