AUTHOR=Hao Fangjing , Li Boyang , Yang Juan 

TITLE=The impact of insurance company participation on the capital market’s sustainable development—empirical evidence based on investor sentiment and stock price synchronicity

JOURNAL=Frontiers in Environmental Science

VOLUME=Volume 10 - 2022

YEAR=2022

URL=https://www.frontiersin.org/journals/environmental-science/articles/10.3389/fenvs.2022.1072094

DOI=10.3389/fenvs.2022.1072094

ISSN=2296-665X

ABSTRACT=Given the representativeness and availability of the data, this paper selects personal posts from the Oriental Wealth Internet Cafe and Sina Internet Cafe Forum to analyze the mechanism of insurance company participation, investor sentiment and stock price synchronicity in China. Using a panel data of listed companies from 2007 to 2018, the evidence shows that investor sentiment in the stock market forum will increase the synchronicity of stock prices in the short term, while insurance company’s share holding effectively reduces impact of investor sentiment on share price synchronicity which plays a mediator effect; the higher the proportion of insurance company’s share holdings, the more obvious the effect. By conducting counterfactual research, the study found that insurance company participation can reduce the synchronicity of stock price by 0.10435 in the group with high investor sentiment than the group with low investor sentiment. For each investor sentiment group, the higher the proportion of insurance company’s share holdings, the greater is the reduction in synchronicity of stock prices. The results of this study can be used by national regulatory authorities to formulate policies in the field of e-finance in order to reduce stock price synchronization, stabilize financial markets and minimize systemic financial risks.