Foreign Shareholder,Stock Price Informativeness And Equity Refinancing

There has been a serious phenomenon of "dropped or rise of the same" in the Chinese stock market for a long time.The stock price synchronization causes the wrong pricing of the stock market and the underestimation of the blue chips,which effects the efficiency of stock price on resource allocation.Shanghai-Hong Kong Stock Connect program was started in November 17,2014 and it allows more foreign investors enjoy increased access to mainland capital market.This article aims at studying the impact of this program on the resource allocation efficiency based on the data form listed companies during July 2012 and June 2017.The paper finds out that Shanghai-Hong Kong Stock Connect program,from the Perspective of foreign shareholder,can improve the Stock Price Informativeness obviously and thus accelerate the equity refinancing of the companies.In addition this article shows that the Stock Price Informativeness of the state-owned enterprises is much higher than private ones and the gap on Stock Price Informativeness between two kinds of companies is enlarged after the implementation of the Shanghai-Hong Kong Stock Connect program,and further research finds that foreign shareholder has much higher effect on the stock price informativeness improvement of the private enterprises than state-owned ones,which leads to the bigger gap between them.This paper enriches the related literature of the economic consequences of the Shanghai-Hong Kong Stock Connect program and provides theoretical supports for the further reform of the capital market.