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Does FinTech coverage improve the pricing efficiency of capital market? Evidence from China

Author

Listed:
  • Chan, Kam C.
  • Chen, Liangyin
  • Huang, Jun
  • Li, Ya

Abstract

Analyzing a sample of Chinese firms, we find that when companies receive more coverage from FinTech advisory firms, their stock prices move less in tandem with the overall market. This suggests that FinTech coverage improves how accurately stock prices reflect firm-specific information. Our results hold true across multiple testing methods and alternative ways of measuring stock price synchronicity. Further analysis shows that FinTech coverage reduces stock price synchronicity primarily by addressing information gaps between companies and investors. Additionally, greater FinTech coverage improves stock liquidity and lowers the costs of raising debt or equity financing. When examining the topics covered by FinTech firms, we find that diverse coverage topics are linked to lower stock price synchronicity, with discussions on finance, corporate governance, and negative sentiment playing a particularly effective role. Finally, a textual analysis reveals that FinTech coverage includes significantly more firm-specific information than traditional analyst reports.

Suggested Citation

  • Chan, Kam C. & Chen, Liangyin & Huang, Jun & Li, Ya, 2025. "Does FinTech coverage improve the pricing efficiency of capital market? Evidence from China," Journal of Banking & Finance, Elsevier, vol. 172(C).
    • Handle: RePEc:eee:jbfina:v:172:y:2025:i:c:s0378426625000172
    DOI: 10.1016/j.jbankfin.2025.107396
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    More about this item

    Keywords

    FinTech coverage; Stock price synchronicity; Firm-specific information; Pricing efficiency;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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