How does the social responsibility preference of funds affect stock price synchronicity?

• Published in: Finance research letters Vol. 65; p. 105596
• Main Authors: Liu, Jianxiang, Yi, Wenyu, Lin, Yajia
• Format: Journal Article
• Language: English
• Published: Elsevier Inc 01.07.2024
• Subjects: Information asymmetry; Socially responsible-oriented funds; Stock price synchronicity; Information asymmetry; Socially responsible-oriented funds; Stock price synchronicity
• ISSN: 1544-6123
• DOI: 10.1016/j.frl.2024.105596

•Investigate the impact of the ownership held by socially responsible-oriented funds (SRFO) on stock price synchronicity (SPS).•SRFO positively influences SPS. This positive relationship is not due to the insensitivity of socially responsible-oriented funds to stock mispricing.•Companies with higher SRFO being more inclined to increase information asymmetry, ultimately leading to an increase in SPS.•Above results only occur in companies with lower size-adjusted CSR scores. We investigated the impact of the ownership held by socially responsible-oriented funds (SRFO) on stock price synchronicity (SPS), using Chinese listed companies from 2010 to 2021 as a sample, and found that SRFO positively influences SPS. Unlike Cao et al. (2023), we found that this positive relationship is not due to the insensitivity of socially responsible-oriented funds to stock mispricing. Instead, it is attributed to companies with higher SRFO being more inclined to increase information asymmetry, ultimately leading to an increase in SPS. It is worth noting that the above results only occur in companies with lower size-adjusted CSR scores.