The more the merrier? The impact of information overload on stock price synchronicity: Evidence from China

Jingmei Zhao and Qinyu Gan

Finance Research Letters, 2024, vol. 62, issue PA

Abstract: Media coverage contributes to the effective absorption of information into asset prices, thereby reducing stock price synchronicity. However, with the proliferation of media coverage, information overload arises. Drawing on data from listed companies spanning the period from 2011 to 2022 we find a U-shaped correlation between media coverage and stock price synchronicity. This suggests that when media coverage surpasses investors’ analytical capacity beyond a certain threshold, it leads to the phenomenon of information overload and increasing stock price synchronicity. Our findings are significant for gaining an objective understanding of the role of information in capital market pricing efficiency.

Keywords: Information overload; Media coverage; Stock price synchronicity (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:62:y:2024:i:pa:s1544612324001120

DOI: 10.1016/j.frl.2024.105082

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