Institutional investor horizon and stock price synchronicity: Do product market competition and analyst coverage matter?

Zeineb Barka, Ramzi Benkraiem, Taher Hamza, Faten Lakhal and Samuel Vigne

International Review of Financial Analysis, 2023, vol. 89, issue C

Abstract: This paper provides new insights into the relation between institutional investment horizon and stock price synchronicity and investigates whether this relationship depends on the intensity of product market competition and analyst coverage. Based on a sample of French listed companies, we find that long-term (short-term) institutional investors are associated with lower (higher) stock price synchronicity. The results also show that the negative effect of long-term institutional investors is more accentuated for firms in less competitive markets and with high analyst coverage. An additional analysis shows that the synchronicity reduction effect does not vary during the financial crisis. Overall, these findings suggest that unlike their short-term counterparts, long term investors reduce asymmetric information and help disseminate firm-specific information into stock prices.

Keywords: Institutional investment horizon; Stock price synchronicity; Product market competition; Analyst coverage; Information asymmetry (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:89:y:2023:i:c:s1057521923002491

DOI: 10.1016/j.irfa.2023.102733

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