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Geographical distance and stock price synchronization: evidence from China

Author

Listed:
  • Xiong Xiong

    (Tianjin University, Nankai District)

  • Chenghao Ruan

    (Tianjin University, Nankai District)

  • Yongqiang Meng

    (Tianjin University, Nankai District)

Abstract

The effects of geographic factors on information dissemination among investors have been extensively studied; however, the relationship between the geographical distance and stock price synchronization remains unclear. Grounded in information asymmetry theory, this study investigates the impact of geographical distance on stock price synchronization in the Chinese stock market. Using the data from the Shanghai and Shenzhen Stock Exchanges, we find that a greater geographical distance between mutual funds and firms considerably increases stock price synchronization, highlighting a strong positive relationship. Additional analysis show that firms in the regions with better external and internal governance, benefit more from reduced information asymmetry, than those in less regulated or transparent regions. These results have key implications for institutional investors and policymakers aiming to enhance information dissemination and market integration in China.

Suggested Citation

  • Xiong Xiong & Chenghao Ruan & Yongqiang Meng, 2025. "Geographical distance and stock price synchronization: evidence from China," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 11(1), pages 1-27, December.
    • Handle: RePEc:spr:fininn:v:11:y:2025:i:1:d:10.1186_s40854-025-00764-1
    DOI: 10.1186/s40854-025-00764-1
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