The Influence Of Institutional Investors’ Network Structure On Stock Price Synchronization

In 2001,China’s Securities Regulatory Commission proposed the strategy of "superregular and creative cultivation and development of institutional investors" and introduced a series of supportive policies and measures to improve the proportion of investor structure and efficiency of capital financing in China.Under the vigorous promotion of the state,the shareholding ratio of institutional investors in China has continued to increase,and the A-share market has steadily entered the era of "institutionalization",and whether institutional investors can truly solve the problem of high stock price synchronization in China has also received increasing attention from academics.However,traditional economics studies only consider the group characteristics of institutional investors,ignoring their "social person" attributes.In the real situation,institutional investors have inextricable social ties with each other,and their decision-making and trading behaviors are also bound and influenced by social networks.In order to explore the relationship between institutional investors’ network structure and stock price synchronicity,based on the perspective of institutional investor network and the existing literature and theoretical basis,this paper systematically expounds the influence mechanism of institutional investors’ network structure on stock price synchronicity,and puts forward hypotheses accordingly.In order to describe the network structure of institutional investors,this paper takes the data of heavy position holdings of institutional investors from 2012 to 2021 as the connection,uses UCINET to establish the weight network and calculate the centrality index.Further,this paper introduces institutional herding and information disclosure quality as mediating variables,and uses stepwise regression method to empirically test the information diffusion effect and resource amplification effect of institutional investors’ network.In addition,in order to study the moderating effect of corporate governance level,this paper uses the principal component analysis method to construct a comprehensive evaluation index of corporate governance level,and tests whether corporate internal governance can make up for the lack of supervision effect of institutional investors.The main conclusions are as follows:(1)The network centrality of institutional investors holding corporate shares is positively related to stock price synchronicity,that is,the shorter the distance and more connections between institutional shareholders and other institutions in the network,the higher the stock price synchronicity of the company.(2)Central institutional investors tend to use information advantages to block information diffusion and improve stock price synchronicity by inducing "true herd behavior."(3)Central institutional investors tend to use their resource advantages to collude with senior executives.(4)Companies with high level of internal governance have better information transparency,which can reduce the cost of external investors to obtain specific information,inhibit the possibility of central institutional investors and senior executives to build information barriers,and thus enrich the content of specific information in stock price.Therefore,China’s regulatory authorities should take the initiative to explore the network property of institutional investors,guide institutional investors’ value investment,promote companies to improve the internal governance system,enrich the channels of voluntary information disclosure,so as to promote the institutional construction of China’s capital market and help the financial reform during the 14 th Five-Year Plan period.