Date of Award


Degree Type


Degree Name

Master of Philosophy (MPHIL)


Finance and Insurance

First Advisor

Prof. WEI Lai

Second Advisor

Prof. QIANG Wei


Are institutional investors informed to the political promotion events? This paper examines the informed trading of institutional investors in the context of political promotion. Institutional investors have superior information environment compared to retail investors. It can establish private information channel with firm management, financial analysts, regulatory bodies and other types of institutions. Since contemporary economic activities are more or less influenced by politics, promotion of important officials can bring favorable local economic development opportunities to companies. If institutional investors are informed to the political promotion events, they are supposed to react in advance of the occurrence of promotion events. We test this proposition in the setting of China where political power is believed to be strong. In our research, we treat the promotion of Chinese provincial politicians as a private signal to institutional investors to examine their trading pattern. Through a difference-in-difference approach, we find that institutional investors accelerate their purchase of shares of the firms exposed to the promotion events before the promotion activities actually happens and increase their shareholding in listed firms after the promotion events. The institutional investors earn a higher cumulative stock return by adjusting their portfolio to the promotion events. We also find this difference in institutional shareholding primarily occurs to firms with low state-own share percentage.

Recommended Citation

Zhang, C. (2017). Informed institutional shareholding: Evidence from political promotion (Master's thesis, Lingnan University, Hong Kong). Retrieved from