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Anticorruption and Capital Market Pricing Efficiency: Evidence From China

Author

Listed:
  • Yanyin Li
  • Yuan George Shan
  • Rong Xu
  • Xingmei Xu
  • Yize Xu

Abstract

This study investigates the impact of anticorruption on capital market pricing efficiency through stock price synchronization. Using a data set from 3188 of China's A‐share listed firms with 20,673 firm‐year observations, our results show that anticorruption significantly reduces stock price synchronization. We conduct a series of robustness checks, including difference‐in‐differences analysis, informal monitoring mechanisms, alternative explanatory variables, and excluding observations during the Global Financial Crisis, and the conclusions remain consistent. The mechanism analysis reveals that anticorruption improves corporate disclosure quality at the micro level and the degree of marketization and government‐market relationship at the macro level, which reduces stock price synchronicity. This effect is more pronounced among state‐owned enterprises (SOEs), especially local SOEs. This study presents empirical evidence regarding the logic of development and governance dynamics in emerging economies.

Suggested Citation

  • Yanyin Li & Yuan George Shan & Rong Xu & Xingmei Xu & Yize Xu, 2025. "Anticorruption and Capital Market Pricing Efficiency: Evidence From China," Economics and Politics, Wiley Blackwell, vol. 37(3), pages 1157-1178, November.
    • Handle: RePEc:bla:ecopol:v:37:y:2025:i:3:p:1157-1178
    DOI: 10.1111/ecpo.70007
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    References listed on IDEAS

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    1. Wanting Zhang & Ning Ding & Shidi Dong & Hong Yue, 2026. "Does Long‐Term Local Government Debt Destabilize Corporate Stock Prices? Empirical Evidence From China," Economics and Politics, Wiley Blackwell, vol. 38(2), pages 575-597, July.

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