Social Trust and Differential Reactions of Local and Foreign Investors to Public News

Chunxin Jia, Yaping Wang and Wei Xiong

No 21075, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper uses the segmented dual-class shares issued by several dozen Chinese firms---A shares to local Chinese investors and H shares to foreign investors---to compare reactions of local and foreign investors to the same public news. We find that local investors react more strongly to earnings forecasts by local analysts, while foreign investors react more strongly to forecasts of foreign analysts. This finding highlights social trust as a force driving people with different social backgrounds to react differently to the same information.

JEL-codes: F3 G02 G14 (search for similar items in EconPapers)
Date: 2015-04
New Economics Papers: this item is included in nep-cna, nep-soc and nep-tra
Note: AP CF IFM
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Citations: View citations in EconPapers (4)

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