How does family control affect stock price synchronicity?

Abstract

This paper examines the effect of family control on the degree of stock price synchronicity. The results reveal that family control has a negative effect on stock price synchronicity, supporting the socioemotional wealth perspective. The results also show that this negative effect of family control on stock price synchronicity is prevalent only for family firms with high analyst coverage and a large institutional investor stake. These results suggest that families disclose more specific information to enhance their reputation and alleviate minority investors’ fears of being expropriated when the firm has less information asymmetry and is well monitored.

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