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Institutional investor horizon and stock price synchronicity: Do product market competition and analyst coverage matter?

Author

Listed:
  • Zeineb Barka

    (IHEC - Institut des hautes études commerciales (Carthage, Tunisie) - UCAR - Université de Carthage (Tunisie))

  • Ramzi Benkraiem

    (Audencia Business School)

  • Taher Hamza

    (Métis Lab EM Normandie - EM Normandie - École de Management de Normandie = EM Normandie Business School)

  • Faten Lakhal

    (PULV - Pôle Universitaire Léonard de Vinci)

  • Samuel Vigne

    (LUISS - Libera Università Internazionale degli Studi Sociali Guido Carli [Roma])

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.

Suggested Citation

  • Zeineb Barka & Ramzi Benkraiem & Taher Hamza & Faten Lakhal & Samuel Vigne, 2023. "Institutional investor horizon and stock price synchronicity: Do product market competition and analyst coverage matter?," Post-Print hal-04193270, HAL.
    • Handle: RePEc:hal:journl:hal-04193270
    DOI: 10.1016/j.irfa.2023.102733
    Note: View the original document on HAL open archive server: https://audencia.hal.science/hal-04193270v1
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    References listed on IDEAS

    as
    1. Akdoğu, Evrim & MacKay, Peter, 2012. "Product markets and corporate investment: Theory and evidence," Journal of Banking & Finance, Elsevier, vol. 36(2), pages 439-453.
    2. Amiram, Dan & Owens, Edward & Rozenbaum, Oded, 2016. "Do information releases increase or decrease information asymmetry? New evidence from analyst forecast announcements," Journal of Accounting and Economics, Elsevier, vol. 62(1), pages 121-138.
    3. An, Heng & Zhang, Ting, 2013. "Stock price synchronicity, crash risk, and institutional investors," Journal of Corporate Finance, Elsevier, vol. 21(C), pages 1-15.
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    Cited by:

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    8. Guo, Jinwen & Duan, Jiangjiao, 2024. "The impact of MD&A digital transformation information disclosure on stock price synchronicity in China," The North American Journal of Economics and Finance, Elsevier, vol. 74(C).

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