Government procurement and stock price synchronicity

Ning Wang, Guowan Yan and Yixin Zeng

Pacific-Basin Finance Journal, 2025, vol. 93, issue C

Abstract: This study investigates the effect of government procurement on stock price synchronicity using a sample of Chinese listed firms from 2015 to 2023. We find a negative association between government procurement and stock price synchronicity, suggesting that government procurement enhances the incorporation of firm-specific information into stock prices. We also find that increasing investor attention and decreasing firms' exposure to demand-side volatility are two channels through which government procurement affects stock price synchronicity. In addition, we find that this negative relationship is more pronounced for firms located in regions with stronger government intervention and during periods of heightened economic policy uncertainty. Finally, we compare the effects of large and small procurement contracts and find that larger contracts are associated with a more substantial reduction in stock price synchronicity.

Keywords: Government procurement; Stock price synchronicity; Investor attention; Stability (search for similar items in EconPapers)
JEL-codes: D72 G30 G38 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:93:y:2025:i:c:s0927538x25002331

DOI: 10.1016/j.pacfin.2025.102896

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