Effects of block and institutional ownership on stock sentiment sensitivity in China

This study investigates the impact of blockholder and institutional ownership on stock sentiment sensitivity in China. Results show that blockholder ownership makes stock prices less susceptible to fluctuating market sentiment, while institutional ownership has the opposite effect. This contrast in effects is caused by performance pressure faced by mutual funds, the majority of institutional investors. Compared with blockholders, institutional investors in China generally hold more dispersed shares with shorter holding periods, thereby amplifying the impact of investor sentiment on stock prices.