Do institutional investors improve informational efficiency of stock prices?

Abstract

This paper examines the effect of institutional investors on stock price informativeness. Using a comprehensive data set of firms listed on the Hochiminh Stock Exchange and the Hanoi Stock Exchange over the 2007 - 2017 period, we find that institutional ownership is negatively associated with stock price synchronicity, which is an inverse measure of stock price informativeness. This result is consistent with the notion that institutional investors contribute to inducing higher informational efficiency of stock prices.