Corporate Governance And Stock Price Synchronicity

Stock price synchronicity is an important indicator to measure the effectiveness of a country’s stock market. From a macro perspective, stock price synchronicity mainly refers to the phenomenon that most of the stock prices in the market go up or down simultaneously in a certain period of time, in other word, stock price synchronicity is a phenomenon of co-movement of stock price. According to the concept of "informational efficiency of prices", stock price synchronicity reflects the amount of firm-specific information incorporated into the share price, the more firm-specific information contained in the share price, the lower the stock price synchronicity. Stock price synchronicity is serious means firm-specific information,which related with the value of company, will be less concludes into investor stock pricing, causing stock cannot be the representative of the company’s intrinsic value, which reduces the effectiveness of the stock and makes stock market less conducive to realize its price discovery function and resource allocation function. Unfortunately, Chinese stock market has high synchronicity; the phenomenon of co-movement of stock price is serious.In the stock market, listed companies spread the company quality information to outside investors and the social public mainly through the channels of information disclosure. While investors and the social public will work out investment decisions according to their own information which they have mastered and argued reasonable. Then they influence the fluctuation of the stock price, which causes further influence of the stock price synchronicity. So, is the company quality information that listed company has disclosed to external investors and the public related to the stock price synchronicity? Can to outside investors of listed companies and with increased by the number of the public disclosure of company information and qualities and improve the quality of information disclosed by the company and Can we achieve the goal to decrease the stock price synchronicity by increasing the number of company quality information that the listed company has disclosed to the outside investors and the social public and improving the quality of information disclosed by the company?These are all the important issues worthy of deep research and discussion.This paper is mainly divided into six parts to demonstrate the effect of corporate governance on the stock price synchronicity. The main contents are:The first part is the introduction. This section mainly includes articles research background, theory significance and practical significance, and a simple introduction to the main content and research framework on this basis and outline describes the innovation of this paper.The second part is the literature review part. This section summarizes the foreign and domestic related literature related to definition and impact of stock price synchronicity, relationship between information disclosure and stock price synchronicity, as well as the correlation between information disclosure and corporate governance. Finally, this part has carried on the commentary to the domestic and foreign literature.The third part is the relevant theoretical analysis and hypothesis. This part introduces stock price synchronicity related basic theory, and proposed for theoretical analysis and the hypothesis of the relationship between ownership structure as well as board of directors governance with the stock price synchronization.The fourth part is the research design. This part fist explains the selection of samples and data source. Then define ownership structure variable as well as board of directors governance variable, which is the substitution variables of the number and quality of firm-specific information disclosure, and stock price synchronicity variable, the measurement of the degree of earnings management, the interpretation and definitions of variables and regression model. In the end of this part, according to related domestic and foreign literature to set the regression model.The fifth part is the empirical test and analysis. This part is mainly for the inspection of related assumption, including descriptive statistics of each variable and robustness test, correlation test and regression analysis, test results and interpretation and analysis of results.The six part is the main conclusion and recommendations. This part is on the basis of the empirical test and analysis to draw conclusions and make relevant recommendations.Through empirical research, this paper makes following conclusions:stock price synchronicity is a concave function of ownership by the largest shareholder; if the largest shareholder is government related, stock price synchronicity will be significantly lower; institutional investors will reduce stock price synchronicity and have a positive effect on increasing the firm-specific information of stock price; the size of board of director and stock price synchronicity are negative correlated; if the board of director has more opens meeting board of directors, stock price synchronicity will be significantly lower and have a positive effect on increasing the firm-specific information of stock price; independent directors will reduce stock price synchronicity and have a positive effect on increasing the firm-specific information of stock price; if the board of director and CEO is separated, stock price synchronicity will be significantly lower and have a positive effect on increasing the firm-specific information of stock price. The innovation of this paper lies in:This paper is from the factors which impact quantity and quality of the firm-specific information disclosed by listed company to analyze the relationship between firm-specific information and stock price synchronicity, try to improve the high stock price synchronicity phenomenon by reducing agency cost as well as improving the level of information disclosed by listed company. Furthermore, this paper tries to clarify the logical relationship between the ownership structure, board governance and the stock price synchronicity, tring to find a new way to explain the inner mechanism and conduction effect about how ownership structure, board governance affect stock price synchronicity.