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Common institutional ownership and commonality in liquidity: Evidence from China

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  • Xiaoyu Chen

Abstract

This study investigates the impact of common institutional ownership on commonality in liquidity. We find that common institutional ownership reduces commonality in liquidity through synergistic governance, which is driven by the economy of scale and externality of common ownership. However, the negative relationship is weakened by exit threats of common ownership, emphasising the important role of active investor monitoring. We show that information transparency is the primary channel through which common institutional ownership reduces liquidity commonality. Moreover, the impacts are more pronounced for large‐cap stocks, and firms with high institutional ownership stability and high stock pricing efficiency.

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  • Xiaoyu Chen, 2025. "Common institutional ownership and commonality in liquidity: Evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 65(2), pages 1635-1668, June.
    • Handle: RePEc:bla:acctfi:v:65:y:2025:i:2:p:1635-1668
    DOI: 10.1111/acfi.13380
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