Abstract: The implementation of the Data Security Law of the People’s Republic of China has strengthened data security governance, improved information efficiency in the capital market, and increased stock price informativeness. Taking this law as a policy shock, this study empirically investigates how data security governance affects stock price synchronicity. The findings reveal that the implementation of this law significantly reduces firms' stock price synchronicity. Mechanism tests indicate that this law curbs synchronicity by enhancing corporate information disclosure quality and promoting corporate digital transformation. Heterogeneity analyses further indicate that such mitigating effect is more pronounced for firms with lower innovation capacity and those located in regions with underdeveloped local data governance. Accordingly, governments ought to strengthen supervision over corporate data security; enterprises should construct and refine their internal data security governance systems; and investors should pay attention to the data security governance of listed companies.

Key words: the Data Security Law, data security governance, stock price synchronicity