Hot Trading and Price Stability Under Media Supervision in the Chinese Stock Market (original) (raw)

The Chinese stock market is one of the markets where price reversal easily takes place in the world. Its opening has been accelerating. However, this market has plenty of shortcomings, some of which involve China's special corporate culture. Artificial manipulations in financial reports are prevalent, which gives rise to uncertainties of investments. We propose turnover, financial transparency, and media coverage in the discussion of Chinese momentum. In so doing, we investigate the reasons for price reversal. We find that portfolio with high turnover usually has high financial transparency but it easily encounters price reversal. By contrast, the portfolio with high media coverage is free of price reversal even if these stocks have relatively low transparency and turnover.