Does mixed-ownership reform restrain stock price synchronicity? Evidence from China

Abstract

We examine the relation between the mixed-ownership reform and the degree of stock price synchronicity by using a sample of 1211 listed State Owned Enterprise (SOE) for the period of 2003–2018 in China. Through empirical assessment, we reveal robust evidence that the higher intensity of the mixed-ownership, the lower degree of SOE stock price synchronicity. Based on path analysis, we verified the negative correlation between the mixed-ownership intensity and the stock price synchronicity via two paths, namely information transparency and analyst coverage augmentation. Our additional analysis established that the negative association between the mixed-ownership intensity and stock price synchronicity is strongly influenced by the decentralization of local governments. Specifically, the stronger degree of decentralized regional governments, the more significant their negative effect.