Direct And Indirect Effects Of Ownership Concentration On Stock Price Synchronicity

Stock price synchronicity is not only a measure of the comovement between individual stocks and the markets,but also an indication of the information capitalized into stock prices via informed trading.Capital market should contribute to the real economy and resource allocation with the support of reasonable prices near the real value of public companies.According to the theory,lower stock price synchronicity and more company information would feed back to the real economy.High ownership concentration is a well-known character for corporate ownership structure in China which is the most important determinant of company governance.High ownership concentration in China is due to historic reasons,in particular,the effect of the reform of state enterprises.Therefore,our research has important policy implications in China.In this paper,we use data of public companies listed on Shanghai Stock Exchange in the past ten years to examine the relation between ownership concentration and stock price synchronicity.We also investigate whether analysts and the international “Big 4” accounting firms are helpful in information analysis and information disclosure,and whether high ownership concentration has impact on those effects.we find that,1)there is a non-linear relation between ownership concentration and stock price synchronicity.Specifically,stock price synchronicity increases with ownership concentration,but this increasing effect is decreasing.2)Analysts and the international “Big 4” accounting firms are helpful to information disclosure,and they reduce the stock price synchronicity.But those effect is weakened by high ownership concentration.