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OFDI and stock price synchronicity: Evidence from China

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  • Yanyi Wang
  • Xueyong Zhang

Abstract

Using the data on outward foreign direct investment (OFDI) by listed companies in China, we find that OFDI significantly increases stock price synchronicity. This result indicates that OFDI releases more market/industry (systematic) information relative to private information. Reverse technology spillover and the host country/region institutional environment are two potential mechanisms through which OFDI increases synchronicity. We find that OFDI plays a role in screening firms with better transparency and corporate governance. The propensity score matching method and instrumental variable regressions are employed to rule out endogeneity issues. We also check the impact of stock return characteristics and macro shocks on this positive relationship.

Suggested Citation

  • Yanyi Wang & Xueyong Zhang, 2025. "OFDI and stock price synchronicity: Evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 65(2), pages 1275-1308, June.
    • Handle: RePEc:bla:acctfi:v:65:y:2025:i:2:p:1275-1308
    DOI: 10.1111/acfi.13368
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