Foreign institutional investors and stock return comovement

Abstract

We investigate whether foreign institutional investors facilitate firm-specific information flow in the global market. Specifically, using annual institutional ownership data from firms across 40 countries, we find that foreign institutional ownership is negatively associated with excess stock return comovement. Our results are more pronounced when foreign institutional investors originate from common-law countries and hold a large equity stake in invested firms; and when the invested firms are located in civil-law countries. Overall, the evidence suggests that foreign institutional investors from countries with strong investor protection play an important informational role in mitigating excess stock return comovement around the world.

Foreign Institutional Investments (FIIs) and the Saudi Stock Market: What Drives Foreign Institutions to Invest?

“…The better information they have regarding market conditions, the quality of firms, and the ranking of underwriters, the more they invest in IPOs and the higher the returns generated from these IPOs. The research of Jiang et al (2018) shows that foreign institutional investors reduce stock return co-movement by producing firm-specific information. This negative impact is more common among FIIs from countries with strong investor protection than among FIIs from countries with weak investor protection.…”

Churn rate prediction in Telecommunication systems

“…Li Jiang et al,2018 [13] yearly institutional possession data from firms crosswise over 40 countries, we locate that outside institutional proprietorship is adversely connected with excess stock return co movement. Our outcomes are progressively articulated when remote institutional financial specialists start from precedent-based law nations and hold a huge value stake in contributed firms; and when the put firms are situated in common law nations.…”

The capital market spillover effect of product market advertising: Evidence from stock price synchronicity

“…Third, our study also extends the literature on stock price synchronicity. A large amount of research investigates how stock price synchronicity is influenced by analyst coverage and forecasting activities (Chan and Hameed 2006;Piotroski and Roulstone 2004), firm disclosure policy (Haggard et al 2008;Kim and Shi 2010), ownership structure (Boubaker et al 2014;Gul et al 2010;Jiang et al 2018), law and political institutions (Fernandes and Ferreira 2009;Hasan et al 2014), and press freedom (Kim et al 2014). Our result provides new evidence to this fast-growing literature by examining how product market advertising affects synchronicity and finds a new determinant of stock price synchronicity.…”