Ownership concentration, foreign shareholding, audit quality, and stock price synchronicity : Evidence from China

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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Detail(s)

Original languageEnglish
Pages (from-to)425-442
Journal / PublicationJournal of Financial Economics
Volume95
Issue number3
Publication statusPublished - Mar 2010

Abstract

This paper investigates the effects of largest-shareholder ownership concentration, foreign ownership, and audit quality on the amount of firm-specific information incorporated into share prices, as measured by stock price synchronicity, of Chinese-listed firms over the 1996-2003 period. We show that synchronicity is a concave function of ownership by the largest shareholder with its maximum at an approximate 50% level. Further, we find that synchronicity is higher when the largest shareholder is government related. We also find that foreign ownership and auditor quality are inversely associated with synchronicity. Finally, we show that the amount of earnings information reflected in stock returns is lower for firms with high synchronicity. © 2009 Elsevier B.V. All rights reserved.

Research Area(s)

  • Audit quality, China, Foreign ownership, Ownership concentration, State ownership, Stock price synchronicity