Abstract Book of the 10th International Conference on Research in Management and Economics
Year: 2025
[PDF]
Market Efficiency and Linguistic Frictions: Lagged Stock Reactions to Credit Rating Announcements in GCC Markets
Dr. Turki Alshammari
ABSTRACT:
This study explores the efficiency of GCC stock markets in absorbing credit rating announcements, with a particular focus on the potential role of linguistic frictions. Given the dominance of individual investors in GCC markets, we examine whether language barriers— specifically, the use of English in reports by major international credit rating agencies (CRAs)—contribute to delayed market reactions. Employing a mixed-methods approach that combines a structured questionnaire and an event study analysis, our findings suggest that linguistic frictions may hinder the timely interpretation of CRA announcements by individual investors. This delay may in turn affect price discovery and market efficiency in the region. The results highlight the importance of considering linguistic accessibility when evaluating the informational efficiency of emerging markets.
Keywords: Credit rating agencies, Event-study, questionnaire, language effect, Individual domination