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
Additional contact information
Zeineb Barka: IHEC - Institut des hautes études commerciales (Carthage, Tunisie) - UCAR - Université de Carthage (Tunisie)
Ramzi Benkraiem: Audencia Business School
Taher Hamza: Métis Lab EM Normandie - EM Normandie - École de Management de Normandie = EM Normandie Business School
Faten Lakhal: PULV - Pôle Universitaire Léonard de Vinci
Samuel Vigne: LUISS - Libera Università Internazionale degli Studi Sociali Guido Carli [Roma]

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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: 2023-07-20
Note: View the original document on HAL open archive server: https://audencia.hal.science/hal-04193270v1
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Citations: View citations in EconPapers (8)

Published in International Review of Financial Analysis, 2023, 89, pp.102733. ⟨10.1016/j.irfa.2023.102733⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04193270

DOI: 10.1016/j.irfa.2023.102733

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