Does Mobile Communication Technology Have Capital Market Consequences? Evidence From Worldwide Launches of 3G Networks

ABSTRACT

Exploiting the staggered rollout of third‐generation (3G) mobile broadband networks across 40 countries between 1999 and 2012, we examine how technological progress affects capital markets. We find that the introduction of 3G networks is followed by a reduction in bid‐ask spreads and an increase in price informativeness. These effects are more pronounced among firms with lower institutional ownership, indicating that information access through mobile broadband networks disproportionally benefits retail investors. We further show that these effects are concentrated in countries with well‐functioning markets, as characterized by transparent accounting information, broad investor participation, and strong legal protections for investors. Taken together, our findings suggest that mobile broadband connectivity reduces information frictions and improves price informativeness. They further highlight the institutional conditions under which these benefits materialize.