Non-executive Directors And Stock Price Synchronicity

The capital market can be regarded as a market of information in nature.From the perspective of "information-efficiency interpretation",the stock price synchronicity reflects the specific information content of firm level which embodied in the stock price,and it is a crucial indicator to measure the transmission efficiency of information on the stock market.The higher stock price synchronicity always tends to trigger the severe consequence that most prices go up and down simultaneously.As a result,the stock price fails to indicate the specific information of the company.Despite the fact that the stock market in our country has achieved rapid development during the past 30 years,the status quo of high level stock price synchronicity is still under the concern of the whole society.Under the background of "deepening the reform of financial system and enhancing the economic ability of financial service entities",it is obvious that only when the stock price reflects the specific information of company adequately,can the financial market exert its ability to rationally allocate resources and thus serve the real economy.Therefore,it is of great practical significance to pay attention to the causes of stock price synchronicity and study the feasible measures to reduce it.Information environment is an important factor affecting stock price synchronicity.Thus,thinking from the perspective of improving enterprise information environment can provide us with feasible ideas to reduce stock price synchronicity.The well functioned corporate governance is conducive to smooth the internal and external information communication mechanism and alleviate the degree of information asymmetry.The board of directors is an important part of corporate governance.Different from the western institutional background,the realization of the supervision function of the board of directors should not only rely on independent directors,but also need to look for the supervisors in the board of directors who are more suitable in China.Non-executive directors elected by major shareholders and other shareholders with important influence on the enterprise are more independent from the management,and are expected to play a better role in supervising the information manipulation behavior of managers,so as to improve the enterprise information environment and reduce the synchronization of stock prices.Based on this,this paper examines the impact of the governance role of non-executive directors on stock price synchronization,the moderating effect of financial background of non-executive directors,equity restriction ratio and analyst concern,and further discusses the mediating effect of accounting conservatism.This paper can be divided into six parts to discuss the above issues:The first part begins with an introduction of research background,theoretical significance and practical value,and then followed by the framework of research,the method used and possible innovations.The second part includes an literature review.This paper will review the relevant domestic and foreign literature of non-executive directors and summarize the research trends of stock price synchronicity.The third part builds on the theoretical basis and research hypothesis.Based on the principal-agent theory,information asymmetry theory and efficient market hypothesis,this part presents the research hypothesis of this paper.The fourth part is the empirical research design of the relationship between non-executive directors and stock price synchronicity.This part firstly defines the variables involved in this paper.Secondly,the multiple regression model is set up to test the hypothesis of this paper.Finally,the sample selection and data sources are introduced.The fifth part presents the empirical results and analysis.Firstly,descriptive statistical analysis and correlation analysis are used to show the main characteristics of samples.Secondly,regression analysis is used to test the relationship between non-executive directors and stock price synchronization.And the robustness test is also conducted at the end of this part.The sixth part summarizes conclusions,suggestions and limitations.This part will first summarize the research conclusions of this paper and put forward policy suggestions based on it.Finally,it points out the limitations of this paper in and the improvements which can be made in the future research.By selecting the A-share listed companies in China's Shanghai and Shenzhen stock markets based onthe sample period from 2008 to 2017,this paper arrives to the following conclusions:(1)Non-executive directors can help to promote the reduction of stock price synchronicity through improving the accounting conservation;(2)Non-executive directors with financial background have incremental contributions to reduce the synchronicity of stock price;(3)The effect of non-executive directors on the reduction of stock price synchronicity is more significant in enterprises with higher equity restriction ratio;(4)The effect of non-executive directors on the reduction of stock price synchronicity is more significant in enterprises with less attention from analysts.