2023/05/08 by Tri Vi Dang, Wei Li, Yongqin Wang · 46 citations
Business, Management and Accounting · Economics, Econometrics and Finance · #Business #China #Corporate Finance and Governance #Economic interventionism #Economics #Finance #Financial Markets and Investment Strategies #Government (linguistics) #Incentive #Information asymmetry #Market Dynamics and Volatility #Market economy #Monetary economics #Stock (firearms) #Stock market #Stock market crash #Stock price #Volatility (finance)
paper · doi:10.1017/s0022109023000637
published in Journal of Financial and Quantitative Analysis 59(5), 2340-2374 (Cambridge University Press)
openalex publication_date 2023/05/08 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/25
Abstract We use the 2015 Chinese stock market crash to study the effects of government stock purchases. The Chinese government purchased stocks to stabilize the markets through state-owned financial institutions known as the “National Team.” We find that the intervention led to reduced volatility and price informativeness. These impacts are driven by the disclosure of government portfolios. Consistent with investors having a stronger incentive to acquire government intervention information instead of fundamental news, we find reduced information production and information asymmetry following intervention disclosure. The article suggests that government stock purchases involve a trade-off between stability and informational efficiency.