Large foreign ownership and stock price informativeness around the world

Wen He, Donghui Li, Jianfeng Shen, Bohui Zhang

Research output: Contribution to journalArticlepeer-review

35 Citations (Scopus)


This study investigates the relation between large foreign ownership (LFO) and the informativeness of stock prices in 40 markets. We show that LFO is positively related to price informativeness, measured by probability of informed trading (PIN) and price non-synchronicity (NONSYNC) which reflects firm-specific variations in stock returns. We also find a stronger association between stock returns and future earnings innovations for firms with higher LFO. Further analysis reveals that the effect of LFO on price informativeness is stronger in developed economies and markets with strong investor protection and a transparent information environment.
Original languageEnglish
Pages (from-to)211-230
Number of pages20
JournalJournal of International Money and Finance
Publication statusPublished - Sep 2013
Externally publishedYes


  • International financial market
  • Large foreign ownership (LFO)
  • Stock price informativeness
  • Probability of informed trading (PIN)
  • Price non-synchronicity (NONSYNC)


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