How does the social responsibility preference of funds affect stock price synchronicity?

Jianxiang Liu, Wenyu Yi and Yajia Lin

Finance Research Letters, 2024, vol. 65, issue C

Abstract: We investigated the impact of the ownership held by socially responsible-oriented funds (SRFO) on stock price synchronicity (SPS), using Chinese listed companies from 2010 to 2021 as a sample, and found that SRFO positively influences SPS. Unlike Cao et al. (2023), we found that this positive relationship is not due to the insensitivity of socially responsible-oriented funds to stock mispricing. Instead, it is attributed to companies with higher SRFO being more inclined to increase information asymmetry, ultimately leading to an increase in SPS. It is worth noting that the above results only occur in companies with lower size-adjusted CSR scores.

Keywords: Socially responsible-oriented funds; Information asymmetry; 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:65:y:2024:i:c:s1544612324006263

DOI: 10.1016/j.frl.2024.105596

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