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Fund Ownership and Stock Price Informativeness of Chinese Listed Firms

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    Rights statement: © Ding, R., Hou, W., Kuo, J-M., & Lee, E. (2013). Fund Ownership and Stock Price Informativeness of Chinese Listed Firms. Journal of Multinational Financial Management

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Original languageEnglish
Pages (from-to)166-185
JournalJournal of Multinational Financial Management
Issue number3
Publication statusPublished - 2013


We examine the impact of mutual fund ownership on stock price informativeness in China. Existing evidence shows that stock price informativeness is low in China, and attributes this to firms’ lack of disclosure incentives under the weak investor protection institutional environment. Mutual funds are more sophisticated and influential than individual investors to monitor firms, and thus serve as an external governance mechanism to improve corporate transparency. However, the impact of mutual funds in China can also be moderated by state ownership of listed firms, which reduces firms’ dependence on outside investors for capital. Indeed, we find that mutual fund ownership is positively related to share price informativeness, but this effect is less pronounced among state-controlled firms. The main policy implication from our findings is that mutual funds contribute to the corporate information environment of emerging economies but further privatization of listed firms would be needed to realize greater benefit.

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