Relationship between Institutional Ownership and Market Volatility: Empirical Evidence from China A-share Market

Hailong Hu

doi:10.54097/b718em11

Authors

Hailong Hu

DOI:

https://doi.org/10.54097/b718em11

Keywords:

Institutional Investors, Shareholding Ratio, Market Volatility, A-Share Market, Corporate Governance

Abstract

This study empirically investigates the link between institutional ownership and market volatility using Chinese A-share listed firms from 2008 to 2023 as the sample. The findings indicate a negative association between the proportion of shares held by institutional investors and stock price fluctuations, supporting the market stabilizer hypothesis for institutional investors. After a series of robustness tests, this conclusion is still valid. Heterogeneity analysis further indicates that the stabilization effect is more obvious during bear market and when the shares are held by public funds and insurance funds. This study provides new empirical evidence for affirming the positive role of institutional investors in stabilizing China's capital market, and has policy implications for guiding the healthy development of institutional investors.

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References

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