RESEARCH ARTICLE
Institutional investor distraction and stock price synchronicity
Taiyun Zhou,
Gang Yao,
Corresponding Author
Taiyun Zhou
School of Economics and Management, Anhui Agricultural University, Hefei, China
Correspondence
Taiyun Zhou, School of Economics and Management, Anhui Agricultural University, Hefei 230036, China.
Email: [email protected]
Search for more papers by this authorGang Yao
School of Economics and Management, Anhui Polytechnic University, Wuhu, China
Search for more papers by this authorTaiyun Zhou,
Gang Yao,
Corresponding Author
Taiyun Zhou
School of Economics and Management, Anhui Agricultural University, Hefei, China
Correspondence
Taiyun Zhou, School of Economics and Management, Anhui Agricultural University, Hefei 230036, China.
Email: [email protected]
Search for more papers by this authorGang Yao
School of Economics and Management, Anhui Polytechnic University, Wuhu, China
Search for more papers by this authorFirst published: 27 December 2024
Abstract
This article examines the relation between institutional investor distraction and stock price synchronicity using extreme industry returns as an exogenous shock to investor attention. We find that institutional investor distraction is negatively associated with the quantity of firm-specific information incorporated into stock prices. Underlying mechanisms that lead to our results are the decremental disclosure of valuable information and reduced efficiency of information dissemination. Further analyses imply that the negative impact of institutional investor distraction is more pronounced for firms with weaker internal control and lower market competition. This stock price synchronicity significantly increases financial constraints and weakens investment horizons.
Open Research
DATA AVAILABILITY STATEMENT
The data that support the findings of this study are available on request from the corresponding author.
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