Research On The Influence Of Institutional Investors’ Shareholding On Stock Price Synchronicity

The Chinese securities market suffers from severe speculation and herd behavior,significant "plate effect" phenomenon of industry and "rise and fall together" phenomenon of individual stock due to insufficient investors’ protection,inadequate legal system,imbalance of investor structure,and lack of professional knowledge in individual investors,which has caused low informativeness of stock price.The consistent fluctuations of individual stocks and markets have destroyed the screening feedback mechanism of the stock price and the resource allocation function of the capital market,and the lower informativeness of stock price is also not conducive to deepening the reform of the capital market and promoting the healthy and efficient development of the capital market.Institutional investors are considered to be the backbone of supervising and managing listed companies and stabilizing the capital market due to their professional financial knowledge and rich capital advantages,and its professional level and scale of management have developed rapidly with the support of multiple policies of CSRC in recent years.Institutionalization of investors in securities market has become a long-term development trend in the future.Different types of institutional investors have different shareholding motivations,transaction styles and investment preferences,and institutional investors holding different companies in the same industry can reduce the cost of supervision and promote the company’s information exchanges and resource sharing.Therefore,this article will study influence and specific mechanism on stock price synchronicity from the perspective of common institutional investors’ shareholding.Based on the background of emerging capital market in China,this paper takes the data of institutional investors’ shareholding of A-share listed companies from 2012 to 2020 as the research sample,and uses the fixed effect model of panel data to explore the impact of the emerging shareholding behavior of common institutional investors on stock price synchronicity.Research conclusions show that:(1)The shareholding of common institutional investors will increase stock price synchronicity.Specifically,whether the existence,the specific quantity,the proportion of shares,the number of enterprises in the same industry of the common institutional investors and stock price synchronicity are significantly positively related;(2)The mechanism test shows that common institutional investors’ shareholding can increase the quality of information disclosure,reduce the degree of information asymmetry between different investors,and promote the absorption of personal investors on public information,thereby weakening noise fluctuations,increasing stock price synchronicity(3)A high level of industry competition will curb the positive correlation of stock price synchronicity and common institutional investors’shareholding,while the high level of marketization will promote the positive relationship between the two;(4)The common institutional investors played the role of "industry hub" and "economies of scale",which led to the reduction of the company’s costs of debt financing and the increase of the value of enterprise.This article distinguishes the nature and integrates process of company information to explain the two-faction perspectives on the causes of stock price synchronicity.In the emerging securities market full of noise,from the perspective of the process of information integration:the stock price synchronicity is reduced first and then increased with incorporation of company information in different periods.The relationship between stock price synchronicity and informativeness of stock price is U-shaped,so stock price synchronicity has limitations as a linear indicator to directly measure informativeness of stock price or efficiency of market pricing and the impact on informativeness of stock price needs to be tested in combination with the mechanism;from the perspective of the result of information integration:the complete integration of two stages of the private company information can increase informativeness of stock price and reduce stock price synchronicity.This article provides management insights and policy suggestions for listed companies,small and medium-sized investors,common institutional investors,and regulators,which is conducive to increasing informativeness of stock price and improving the efficiency of resource allocation in capital market.