Institutional investor horizon and stock price synchronicity: Do product market competition and analyst coverage matter? |
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| Institution: | 1. PRESTIGE Labo, IHEC- University of Carthage, Tunisia;2. Audencia Business School (AACSB, EQUIS & AMBA), France;3. EM Normandie Business School, Metis Lab, France;4. Léonard de Vinci Pôle Universitaire, Research Center, 92916 Paris, La Défense, France;5. Luiss Business School, Via Nomentana, 216, 00162 Roma RM, Italy;1. School of Mathematics, Southwest Jiaotong University, Chengdu, China;2. School of Finance, Renmin University of China, Beijing, China;3. School of Finance, Nanjing University of Finance and Economics, Nanjing, China;1. Worcester Polytechnic Institute, 100 Institute Rd, Worcester, MA 01609, United States of America;2. Broadwell College of Business and Economics, Fayetteville State University, Fayetteville, NC 28301., United States of America;1. College of Management and Economics, Tianjin University, Tianjin 300072, China;2. School of Economics and Finance, Massey University, New Zealand;1. School of Management, Xi''an Jiaotong University, 28 Xianning W Rd, Xi''an, Shaanxi, China;1. Department of Business Administration, Sejong University, 209 Neungdong-ro, Gwangjin-gu, Seoul 05006, South Korea;2. School of Business Administration, Chung-Ang University, 84 Heukseok-ro, Dongjak-gu, Seoul 06974, South Korea |
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| Abstract: | This paper provides new insights into the relation between institutional investment horizon and stock price synchronicity and investigates whether this relationship depends on the intensity of product market competition and analyst coverage. Based on a sample of French listed companies, we find that long-term (short-term) institutional investors are associated with lower (higher) stock price synchronicity. The results also show that the negative effect of long-term institutional investors is more accentuated for firms in less competitive markets and with high analyst coverage. An additional analysis shows that the synchronicity reduction effect does not vary during the financial crisis. Overall, these findings suggest that unlike their short-term counterparts, long term investors reduce asymmetric information and help disseminate firm-specific information into stock prices. |
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| Keywords: | Institutional investment horizon |
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