# Cross-shareholding networks and stock price synchronicity: Evidence from China

## TL;DR

This study explores how cross-shareholding networks influence stock price informativeness in China's market, revealing that such networks enhance price synchronicity by reducing noise, especially for large firms during downturns.

## Contribution

It provides empirical evidence that cross-shareholding improves stock price informativeness through noise reduction, highlighting the role of ownership structure in market efficiency.

## Key findings

- Cross-shareholding increases stock price synchronicity.
- The effect is stronger for large firms.
- Market downturns amplify the impact.

## Abstract

This paper investigates the effect of cross-shareholding on stock price synchronicity, as a measure of price informativeness, of the listed firms in the Chinese stock market. We gauge firms' levels of cross-shareholdings in terms of centrality in the cross-shareholding network. It is confirmed that it is through a noise-reducing process that cross-shareholding promotes price synchronicity and reduces price delay. More importantly, this effect on price informativeness is pronounced for large firms and in the periods of market downturns. Overall, our analyses provide insights into the relation between the ownership structure and price informativeness.