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Does mixed-ownership reform restrain stock price synchronicity? Evidence from China

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  • Wang, Wei
  • Cheng, Sijia
  • Nahar, Shamsun
  • Alhaleh, Shadi Emad Areef
  • Wang, Hua

Abstract

We examine the relation between the mixed-ownership reform and the degree of stock price synchronicity by using a sample of 1211 listed State Owned Enterprise (SOE) for the period of 2003–2018 in China. Through empirical assessment, we reveal robust evidence that the higher intensity of the mixed-ownership, the lower degree of SOE stock price synchronicity. Based on path analysis, we verified the negative correlation between the mixed-ownership intensity and the stock price synchronicity via two paths, namely information transparency and analyst coverage augmentation. Our additional analysis established that the negative association between the mixed-ownership intensity and stock price synchronicity is strongly influenced by the decentralization of local governments. Specifically, the stronger degree of decentralized regional governments, the more significant their negative effect.

Suggested Citation

  • Wang, Wei & Cheng, Sijia & Nahar, Shamsun & Alhaleh, Shadi Emad Areef & Wang, Hua, 2022. "Does mixed-ownership reform restrain stock price synchronicity? Evidence from China," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 390-404.
    • Handle: RePEc:eee:ecanpo:v:73:y:2022:i:c:p:390-404
    DOI: 10.1016/j.eap.2021.11.003
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    More about this item

    Keywords

    State-owned enterprise; Mixed-ownership; Reform; Stock price synchronicity; China;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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