Institutional investors' site visits, market attention, and stock market information efficiency—Evidence from stock price synchronicity

Hong Chen, Mengyun Zhang, Jun Zeng and Hongjing Pu

Managerial and Decision Economics, 2023, vol. 44, issue 4, 1833-1845

Abstract: As external governance factors, institutional investors' governance mechanisms and governance effect have been focus areas of research. Based on the data of A‐share listed companies in the Shenzhen Stock Exchange from 2013 to 2019, this study discusses the impact of institutional investors' site visits on capital market information efficiency. The study finds that institutional investors' site visits can significantly reduce stock price synchronicity, indicating the potential of site visits to improve capital market information efficiency. Market attention can play an amplifying role in the relationship between institutional investors' site visits and stock price synchronicity, which manifests as their sensitivity enhancement. Further, institutional investors' site visits are more effective for reducing stock price synchronicity in non‐state‐owned enterprises and those in areas with low marketization. Moreover, institutional research increases information asymmetry between investors. This study demonstrates the positive role of institutional research from the perspective of capital market information efficiency and confirms the effectiveness of institutional investors as external governance factors.

Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:44:y:2023:i:4:p:1833-1845

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