Media Coverage,Institutional Investors And Stock Price Synchronicity

The information content of the stock price is the key factor that affects the capital market resource allocation efficiency.Stock price synchronicity is the main indicators to measure the information content of the stock price,indicating the phenomenon that the companies' stock prices rise and fall at the same time in a certain period of time.Compared with the developed countries,the stock price in China's capital market “rise or fall at the same time” phenomenon is more serious,and the price of information content ranked first to last in the world,lead to that the company's stock price contains a lot of noise,lower the companies' stock price information content,seriously affect the effectiveness of the capital market to guide the resources allocation,and damage the interests of small and medium investors to different degrees.Therefore,institutional investors came into being,as a market participants,institutional investors have a certain degree of professional skills and financial advantages,and what its impact on stock price synchronicity? As the external governance mechanism,the media plays an important role in improving the information quality of listed companies and protecting the legitimate rights and interests of investors.Can media coverage really improve the information environment of capital market? How does the media affect the stock price synchronicity? How does the media play a regulatory role in the relationship between institutional investors and stock price synchronicity? This paper will address the above issues.This paper uses the combination of normative and empirical research methods.Firstly,the literatures on media coverage,institutional investors and stock price synchronicity are reviewed.Based on the information economics theory,behavioral finance theory and information asymmetry theory,this paper analyzes the relationship between institutional investors and stock price synchronicity and put forward the research hypotheses,and empirically test the effect of institutional investors to the stock price synchronicity.Based on the reputation theory and information asymmetry theory,this paper analyzes the relationship between media coverage and stock price synchronicity and put forward the research hypotheses,and empirically test the effect of media coverage to the stock price synchronicity.The conclusions:The increase of shareholding ratio of institutional investors and the increase of media coverage can significantly reduce the synchronicity of stock price;Compared with gray institutional investors,independent institutional investors have more significant effect on the reduction of stock price synchronicity;The relationship between institutional investors and stock price synchronicity is significantly positive when add the variable of media coverage,indicating that the role of institutional investors and media coverage on stock price synchronicity show the alternative relationship,media coverage will reduce the degree of negative effect of the institutional investors on stock price synchronicity.Thus,this paper get revelation that stock price synchronicity reflects the information efficiency of stock market negatively in China's capital market.On the one hand,it is necessary to improve the relevant system of the securities market and promote the diversified development of institutional investors and improve their own professional quality;On the other hand,the media management system should be perfected,the behavior of media reporting should be regulated,which reduce the stock price synchronicity.