Harmonious Stock Prices

Abstract

Stock price movements in China still remain highly harmonious, in spite of the many significant regulatory and structural changes over the recent years. A survey of the literature reveals that harmony in the stock price movements is related to a few salient features in China’s capital market: high ownership concentration, high incidence of the use of pyramidal ownership structure, significant state ownership, and a lack of active institutional investors. In addition, we also point out that harmonious stock prices may generally result from low intensity of private information acquisitions by risk arbitrageurs.

Keywords

stock price synchronicity / firm-specific information / market efficiency