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Dual institutional shareholders and stock price volatility——Evidence from fund investors in China

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  • Ding, Ning
  • Wang, Kai
  • Wang, Chenbo

Abstract

For testing the dual institutional shareholders' effect on the stock market in China, we use the A-share listed firms in China from 2013 to 2021 as sample and empirically analyze the effect of dual fund investors (holding both stocks and bonds) on the share price volatility. It is found that dual fund investors can effectively mitigate the share price volatility of listed firms, and the above conclusion still holds after taking endogeneity tests and robustness tests. There are three mechanisms for this effect: one is mitigating institutional investors' herd behavior, another is increasing institutional investment research, and the last is improving corporate governance. In addition, this paper further finds that the role of dual fund investors in stabilizing stock prices is more obvious when the firms are under the constraint of short selling or have poor ESG performance.

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  • Ding, Ning & Wang, Kai & Wang, Chenbo, 2025. "Dual institutional shareholders and stock price volatility——Evidence from fund investors in China," Pacific-Basin Finance Journal, Elsevier, vol. 93(C).
    • Handle: RePEc:eee:pacfin:v:93:y:2025:i:c:s0927538x25002409
    DOI: 10.1016/j.pacfin.2025.102903
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