Author(s)

Na Song ¹, Ebenezer Appiah ¹

Affiliation(s)

¹ School of Management and Economics, University of Electronic Science and Technology of China, Chengdu, China

Corresponding Author

Na Song

ABSTRACT

The study investigates the influence of investor sentiment (IS) on stock liquidity in the Chinese stock market. The study also examines the moderating effect of institutional investor shareholding ratio on stock liquidity.  We utilized daily panel data in Chinese stock market from 2020-2022. We adopted the dynamic fixed technique to analyse the data; the study reveals a negative relationship between IS and stock liquidity. Also, our result portrays a significant interaction effect between investor sentiment (IS) and stock liquidity. However, it was further discovered that the moderating effect of institutional investor shareholding ratio and IS enhances stock liquidity. Lastly, we discuss the policy implications of our results, including how vital stock market players should bridge the communication gap between institutions and investors in other to limit the circulation of false news which raises IS in other to improve stock liquidity.

KEYWORDS

Investors sentiment; Institutional ownership; Liquidity

CITE THIS PAPER

Na Song, Ebenezer Appiah, Investor Sentiment, Institutional Ownership and Liquidity: Evidence from China. Financial Engineering and Risk Management (2023) Vol. 6: 118-124. DOI: http://dx.doi.org/10.23977/ferm.2023.061016.

REFERENCES

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