RESEARCH ARTICLE
Relative Performance Evaluation and Stock Price Informativeness: Evidence From a Natural Experiment in China
Wenjing Cai,
Binglei Duan,
Rong Li,
Wenjing Cai
Business School, University of International Business and Economics, Beijing, China
Search for more papers by this authorBinglei Duan
School of Accountancy, Central University of Finance and Economics, Beijing, China
Search for more papers by this authorCorresponding Author
Rong Li
School of Management, Shandong University, Jinan, China
Correspondence:
Rong Li ([email protected])
Search for more papers by this authorWenjing Cai,
Binglei Duan,
Rong Li,
Wenjing Cai
Business School, University of International Business and Economics, Beijing, China
Search for more papers by this authorBinglei Duan
School of Accountancy, Central University of Finance and Economics, Beijing, China
Search for more papers by this authorCorresponding Author
Rong Li
School of Management, Shandong University, Jinan, China
Correspondence:
Rong Li ([email protected])
Search for more papers by this authorFirst published: 10 July 2025
Funding: This work was supported by the National Natural Science Foundation of China (Grant 72002034; 72332002); the Humanities and Social Sciences Foundation of Ministry of Education of China (Grant 23YJC630088); the Natural Science Foundation of Shandong Province (Grant ZR2023QG057); and the China National Postdoctoral Researchers Funding Program (Grant GZC20233307).
ABSTRACT
This study examines the impact of relative performance evaluation (RPE) on stock price informativeness. We hypothesise that firms under RPE will reduce the amount of information disclosed, resulting in diminished stock price informativeness. Using a natural experiment involving the issuance of regulations mandating RPE among central state-owned enterprises (central SOEs) in China, we employ a difference-in-differences (DID) analysis and observe a significant decrease in firm-specific information reflected in the stock prices of firms that adopt RPE. Mechanism tests indicate that firms adopting RPE exhibit higher financial report similarity, that their stock prices rely more heavily on trading volume information, and that RPE-adopting firms disclose less information related to corporate strategy and investment. Furthermore, the effect of RPE adoption on stock price informativeness is more pronounced in firms that are relatively less transparent or have weaker corporate governance.
Open Research
Data Availability Statement
Data will be made available on request.
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