Directors appointed by non-state shareholders and stock price synchronicity: Evidence from Chinese SOEs

Zongtao Tian, Zhibin Chen and Xinxue Chang

Journal of Multinational Financial Management, 2024, vol. 76, issue C

Abstract: Do non-state shareholders who are given more boardroom "voice" inhibit stock price synchronicity? Utilizing panel data for Chinese enterprises spanning 2007–2021, we explore the impact of directors appointed by foreign shareholders and non-foreign shareholders on stock price synchronicity. Our findings indicate that directors appointed by non-state shareholders are negatively related to stock price synchronicity. Compared with directors appointed by non-foreign shareholders, directors appointed by foreign shareholders exert more effective governance effects and reduce stock price synchronicity. Compared with directors appointed by non-foreign shareholders, directors appointed by foreign shareholders exert a more effective information effect, resulting in lower share price synchronicity. Heterogeneous analyses reveal that this impact is more pronounced in non-multinational enterprises, and enterprises with foreign directors. Furthermore, directors appointed by non-state shareholders reduce stock price synchronicity mainly through the information effect.

Keywords: Directors appointed by non-state shareholders; Stock price synchronicity; Information effect; Multinational enterprises; Foreign directors (search for similar items in EconPapers)
JEL-codes: G14 G32 M12 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:mulfin:v:76:y:2024:i:c:s1042444x24000495

DOI: 10.1016/j.mulfin.2024.100884

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