Stock prices of publicly traded firms can affect the investment decisions of private firms in the same industry both beneficially?by providing relevant industry- and market-wide information? and detrimentally?by overwhelming private firm’s own information set. Using data from Korea for the period of 2000-2013, we find evidence of negative externalities. Specifically, we find that the investment decisions of private firms are associated more with the relatively noisier KOSDAQ peer q-ratio than with the KOSPI peer q-ratio. Also, the relationship between private-firm investment and public-peer q is present regardless of the fundamental correlation between private firms and their public peers. The relationship is also more pronounced when private firms have negative cashflows. Further analysis indicates that the observed relationship between private-firm investment and public-peer q can hardly be consistent with private firms’ rational learning.