RESEARCH ARTICLE
OFDI and stock price synchronicity: Evidence from China
Yanyi Wang,
Xueyong Zhang,
Corresponding Author
Yanyi Wang
School of Finance, Central University of Finance and Economics, Beijing, China
Correspondence
Yanyi Wang, School of Finance, Central University of Finance and Economics, Beijing, China.
Email: [email protected]
Search for more papers by this authorXueyong Zhang
School of Finance, Central University of Finance and Economics, Beijing, China
Search for more papers by this authorYanyi Wang,
Xueyong Zhang,
Corresponding Author
Yanyi Wang
School of Finance, Central University of Finance and Economics, Beijing, China
Correspondence
Yanyi Wang, School of Finance, Central University of Finance and Economics, Beijing, China.
Email: [email protected]
Search for more papers by this authorXueyong Zhang
School of Finance, Central University of Finance and Economics, Beijing, China
Search for more papers by this authorFirst published: 10 November 2024
Abstract
Using the data on outward foreign direct investment (OFDI) by listed companies in China, we find that OFDI significantly increases stock price synchronicity. This result indicates that OFDI releases more market/industry (systematic) information relative to private information. Reverse technology spillover and the host country/region institutional environment are two potential mechanisms through which OFDI increases synchronicity. We find that OFDI plays a role in screening firms with better transparency and corporate governance. The propensity score matching method and instrumental variable regressions are employed to rule out endogeneity issues. We also check the impact of stock return characteristics and macro shocks on this positive relationship.
Open Research
DATA AVAILABILITY STATEMENT
Data available on request from the authors.
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