The Impact of Foreign Ownership on Information Asymmetry in China Stock Markets

Foreign ownership in emerging markets usually has two contrary effects on information asymmetry of local markets. Based on the panel data of 1393 stocks from 2012 to 2014 in Shanghai and Shenzhen Exchange,this paper examines the impact of foreign ownership on the information asymmetry in China stock markets. The empirical results show that there exists a significant and positive impact of foreign ownership on information asymmetry measured by probability of informed trading(PIN) in China,which reveals that foreign investors tend to make profits from their informational advantages rather than improve the general informational environments in local markets.