Large Shareholder Holdings?internal Control And Stock Price Synchronicity

From a macro point of view, the stock price synchronicity mainly refers to, in a period of time, the rise or fall of the majority of the stock at the same time; from a microscopic point of view, it refers to the stock price trend of a specific stock price whose change synergies with the overall trend of the stock market. Information drives the stock price movements in the stock market, which includes information on the company level and market level. The high extent of sock price synchronization means that the stock price contains only a little information of the company characteristics, thus the transmission efficiency of firm-specific information is decreased, the actual value of the company can not be recognized by investors, these lead to the reduction of resource allocation efficiency. China's stock market showed a phenomenon of high synchronization as �plate linkage� in a long time, the stock price hardly reflects firmspecific information, which weakens the screening and feedback function of the stock price on the company's intrinsic value and reduces the effectiveness of the securities market. At the same time, �one single large shareholder� is the typical characteristic of the listing corporations in China, which cause the inevitable result��the control status of the large shareholders in corporation and the principal-agent problem between the major shareholders and other hareholders. Major shareholders always try to maximize their own interests, transfer the company's assets directly or indirectly, encroach the interests of other shareholders, which brings a negative impact to the development of the corporation. Substantial shareholders tend to disclose less firmspecific information in order to cover up their opportunistic behavior, which directly affects the content of firm-specific information in the stock price of the listing corporations, and thus influences the volatility of the stock price.Based on the western mature capital market, the research on internal control has achieved a lot of harvests, but many of these research results may not be suitable for China which is in the course of economic transition. As a rule of contract, internal control is an important internal governance mechanism, which can play an important role in guaranting the information quality of financial report and improving the transparency of accounting information, and can also enhance the content of firmspecific information in the stock price of the listing corporations. At the same time, internal control, as the endogenous variable to determine the quality of accounting information, can effectively restrict the behaviors of the large shareholders to encroach small shareholders which are emerged under the condition of asymmetric information.From the perspective of internal control and ownership structure, we study the relationship between corporate governance and stock price synchronization and the regulation effect of internal control in the relationship between corporate governance and stock price synchronization based on the sample of Chinese listed companies in 2008-2013 years.We find that, under the current economic environment in China, the ownership structure of enterprises, especially the large number of controlling shareholders, is an important reason for the high stock price synchronization. Further study proves that the internal control can significantly reduce the positive relationship between controlling shareholders and stock price synchronization and this role in private enterprise and in the lower process of market is more significant. The research shows that the internal control has a significant governance function on the inhibition of stock price synchronization, and it also shows the important value of optimizing corporate governance mechanism.