RESEARCH ARTICLE
Common institutional ownership and commonality in liquidity: Evidence from China
Xiaoyu Chen,
Corresponding Author
Xiaoyu Chen
Economics and Management School, Wuhan University, Wuhan, China
Correspondence
Xiaoyu Chen, Economics and Management School, Wuhan University, Wuhan, 430072, China.
Email: [email protected]
Search for more papers by this authorXiaoyu Chen,
Corresponding Author
Xiaoyu Chen
Economics and Management School, Wuhan University, Wuhan, China
Correspondence
Xiaoyu Chen, Economics and Management School, Wuhan University, Wuhan, 430072, China.
Email: [email protected]
Search for more papers by this authorFirst published: 18 December 2024
Abstract
This study investigates the impact of common institutional ownership on commonality in liquidity. We find that common institutional ownership reduces commonality in liquidity through synergistic governance, which is driven by the economy of scale and externality of common ownership. However, the negative relationship is weakened by exit threats of common ownership, emphasising the important role of active investor monitoring. We show that information transparency is the primary channel through which common institutional ownership reduces liquidity commonality. Moreover, the impacts are more pronounced for large-cap stocks, and firms with high institutional ownership stability and high stock pricing efficiency.
Open Research
DATA AVAILABILITY STATEMENT
The data that support the findings of this study are available from the corresponding author upon reasonable request.
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