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Does common ownership affect stock price synchronicity?

Author

Listed:
  • Liu, Wenhua
  • Sun, Bohong
  • Zhao, Lili
  • Zhu, Pingheng

Abstract

The study explores the impact of common ownership on stock price synchronicity. As an increasingly widespread phenomenon in the capital market, we have demonstrated that common ownership can enhance corporate stock price synchronicity. The mechanistic analysis confirms that common ownership promotes stock price synchronization by increasing information disclosure. In addition, we provide evidence that this effect of common ownership is significant only when common institutional investors are predominantly long-term investors and have a greater information advantage. Last, the positive relationship between common ownership and stock price synchronicity is more pronounced when the corporate has more noise trading and disclosure costs. Overall, our study supplies fresh insight into the economic consequences of co-ownership in stock markets, providing a theoretical foundation for regulators to refine guidance for institutional investors and optimize the noise-driven trading environment in emerging markets.

Suggested Citation

  • Liu, Wenhua & Sun, Bohong & Zhao, Lili & Zhu, Pingheng, 2025. "Does common ownership affect stock price synchronicity?," Research in International Business and Finance, Elsevier, vol. 77(PB).
    • Handle: RePEc:eee:riibaf:v:77:y:2025:i:pb:s0275531925002016
    DOI: 10.1016/j.ribaf.2025.102945
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    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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