The domestic and foreign institutional investors’ effect on the stock price synchronicity: An empirical study on the Chinese Shenzhen Stock Exchange

The purpose of this research is to calculate the price synchronicity of Shenzhen Stock Exchange and identify the different influence that the domestic institutional investors and qualified foreign institutional investors have on the price synchronicity. I come to the conclusion that there is a decreasing tendency of stock price synchronicity in Shenzhen Stock Exchange from 2007 to 2012. By regressing the main model, I found that the changes of domestic institutional investors have significant effect on decreasing the stock price synchronicity. On the contrary, the coefficients of foreign institutional investors are insignificant.