Ownership Concentration, Foreign Shareholding, Audit Quality, and Stock Price Synchronicity: Evidence from China

By Ferdinand A. Gul, Jeong‐Bon Kim, Annie A. Qiu. 2010

1,170 citations recorded by the source corpus.

This paper investigates the effects of largest-shareholder ownership concentration, foreign ownership, and audit quality on the amount of firm-specific information incorporated into share prices, as measured by stock price synchronicity, of Chinese-listed firms over the 1996-2003 period. We show that synchronicity is a concave function of ownership by the largest shareholder with its maximum at an approximate 50% level. Further, we find that synchronicity is higher when the largest shareholder is government related. We also find that foreign ownership and auditor quality are inversely associated with synchronicity. Finally, we show that the amount of earnings information reflected in stock returns is lower for firms with high synchronicity.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/b08858a8a08c5f6dc3a3e40d33058acb2ae2129b

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Citations in the corpus

The Effect of Trade Secrets Law on Stock Price Synchronicity: Evidence from the Inevitable Disclosure Doctrine (2020, neutral): “We include a large number of control variables suggested by prior studies (e.g., Piotroski and Roulstone 2004; Gul, Kim, and Qiu 2010; Kim and Shi 2012).”
Do countries matter for voluntary disclosure? Evidence from cross-listed firms in the US (2012, background): “Prior research suggests that earnings are less value-relevant for loss-making firms (Hayn, 1995). Managers of loss-making firms also face greater uncertainty about future prospects, thus reducing their ability, and willingness, to forecast future earnings. Here ANALYST represents the number of finan”
The Real and Accrual-based Earnings Management Behaviors: Evidence from the Split Share Structure Reform in China (2014, methodology): “Board independence and external audits by the Big 4 auditors are perceived to reduce controlling shareholders' earnings manipulation, and improve corporate transparency and accounting quality (Gul et al., 2010; Klein, 2002).”
Equity Incentives and Corporate Fraud in China (2015, neutral): “public firms (Gul et al., 2010), as well as the monitoring functions of the board and external investors.”
Auditor Choice in Politically Connected Firms (2014, neutral): “, 2008), including in research that relies on whether the company retains a Big Four firm to gauge audit quality (Gul et al., 2010).”