Analysts' information acquisition and stock price synchronicity: A regulatory perspective from China

Haiyan Jiang, Donghua Zhou, Joseph H. Zhang

Research output: Contribution to journalArticleResearchpeer-review

Abstract

Against the backdrop of the Chinese Directive 40 (China’s Reg FD) issued in 2007 as an attempt to curb insider trading and to level the information playing field, this study investigates whether analysts’ private information acquisition influences the extent to which firm-specific information is impounded into stock prices, i.e., stock price synchronicity, and how the restrictions on selective disclosures imposed by Directive 40 have shaped the relationship between analyst information acquisition and synchronicity. Using a pre-Directive 40 sample, we show that synchronicity is negatively related to analysts’ private information acquisition, which provides support for the ‘‘information advantage’’ argument of analysts’ information production. However, the ability of analysts’ private information acquisition in improving firm-specific information incorporated into stock price is mitigated post-Directive 40 due to a restriction on selective disclosures and/or private communication. Moreover, we find that this regulatory impact varies for firms being followed by affiliated analysts versus non-affiliated analysts.

LanguageEnglish
Pages153-179
Number of pages27
JournalAccounting Horizons
Volume33
Issue number1
DOIs
Publication statusPublished - 1 Mar 2019
Externally publishedYes

Fingerprint

Synchronicity
China
Stock prices
Information acquisition
Analysts
Private information
Selective disclosure
Information production
Insider trading
Communication
Information advantage
Field study

Keywords

  • China's Reg FD
  • Financial analysts
  • Selective disclosures
  • Stock price synchronicity

Cite this

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Analysts' information acquisition and stock price synchronicity : A regulatory perspective from China. / Jiang, Haiyan; Zhou, Donghua; Zhang, Joseph H.

In: Accounting Horizons, Vol. 33, No. 1, 01.03.2019, p. 153-179.

Research output: Contribution to journalArticleResearchpeer-review

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