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Cross-shareholding networks and stock price synchronicity: Evidence from China

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  • Fenghua Wen

    (CSU)

  • Yujie Yuan

    (CSU)

  • Wei-Xing Zhou

    (ECUST)

Abstract

This paper investigates the effect of cross-shareholding on stock price synchronicity, as a measure of price informativeness, of the listed firms in the Chinese stock market. We gauge firms' levels of cross-shareholdings in terms of centrality in the cross-shareholding network. It is confirmed that it is through a noise-reducing process that cross-shareholding promotes price synchronicity and reduces price delay. More importantly, this effect on price informativeness is pronounced for large firms and in the periods of market downturns. Overall, our analyses provide insights into the relation between the ownership structure and price informativeness.

Suggested Citation

  • Fenghua Wen & Yujie Yuan & Wei-Xing Zhou, 2019. "Cross-shareholding networks and stock price synchronicity: Evidence from China," Papers 1903.01655, arXiv.org.
  • Handle: RePEc:arx:papers:1903.01655
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