Using abnormal analyst coverage to unlock new evidence on stock price crash risk

2020 ◽  
Author(s):  
Hasibul Chowdhury ◽  
Robert Faff ◽  
Khoa Hoang
Keyword(s):  
Stock Price ◽  
Crash Risk ◽  
Analyst Coverage ◽  
New Evidence

Analyst coverage, optimism, and stock price crash risk: Evidence from China

2013 ◽  
Vol 25 ◽  
pp. 217-239 ◽  
Author(s):  
Nianhang Xu ◽  
Xuanyu Jiang ◽  
Kam C. Chan ◽  
Zhihong Yi
Keyword(s):  
Stock Price ◽  
Crash Risk ◽  
Analyst Coverage

scholarly journals Analyst coverage and future stock price crash risk

2019 ◽  
Vol 20 (1) ◽  
pp. 63-77 ◽  
Author(s):  
Guanming He ◽  
Lu Bai ◽  
Helen Mengbing Ren
Keyword(s):  
Stock Price ◽  
Risk Measure ◽  
Investment Decision ◽  
Financial Analysts ◽  
Crash Risk ◽  
Analyst Coverage ◽  
Content Type ◽  
Information Intermediaries ◽  
Investment Decision Making ◽  
The Impact

Purpose Whether financial analysts play an effective role as information intermediaries and monitors has triggered a wide spread of debate among academics and practitioners to date. The purpose of this paper is to complement this debate by investigating the association between analyst coverage and firm-specific future stock price crash risk. Design/methodology/approach Regression analysis is based on a large sample of US public firms and the crash risk measure of Hutton et al. (2009). Potential endogeneity concerns are alleviated by restricting the sample period to the post-Regulation-FD period and conducting an analysis of the impact threshold for a confounding variable method per Larcker and Rusticus (2010). Findings Evidence reveals that a high level of analyst coverage is associated with lower future stock price crash risk. Furthermore, the negative association between analyst coverage and stock price crash risk is stronger for firms that have high financial opacity. Additionally, analyst forecast pessimism is negatively associated with future crash risk. Research limitations/implications Our research provides evidence in support for the view that financial analysts play an active information intermediary role in a way that increases information transparency of a firm and reduces its crash risk. Also, our study offers support for the view that analysts perform an effective monitoring role in a way that constraints management’s bad news hoarding activities and reduces future crash risk. Practical implications This study is of interest to investors who seek analyst reports for their investment decision making and for information providers who demand external financing. The findings of this study also have some other important implications for practitioners, given the economic and welfare consequences of stock price crashes. Originality/value This study offers support for the view that analysts serve positive roles as information intermediaries and monitors in the US stock market.

scholarly journals Diversification Strategy and Stock Price Crash Risk：Evidence from China

2020 ◽  
Vol 15 (3) ◽  
pp. 94
Author(s):  
Jun Qi ◽  
Wenying Diao
Keyword(s):  
Stock Price ◽  
Audit Quality ◽  
Positive Association ◽  
Crash Risk ◽  
Corporate Diversification ◽  
Diversification Strategy ◽  
Significant Positive Association ◽  
Analyst Coverage ◽  
Listed Firms ◽  
The Impact

This study examines the impact of the corporate diversification strategy on the stock price crash risk. Using a large sample of Chinese A-share listed companies for the period 2003-2017, we find the stock price crash risk significantly increases when the operation strategy of a firm changes from a specialized operation to a diversified operation or the degree of diversified operations deepens. We also find that our results are stronger for non-state-owned listed firms, but not significant for state-owned firms. Furthermore, we find that the significant positive association between diversification and crash risk is more pronounced for firms with low external audit quality and low analyst coverage. Our study suggests that the diversification of operating strategy matter in determine stock price crash risk.

Stock price crash risk and unexpected earnings thresholds

2018 ◽  
Vol 44 (8) ◽  
pp. 1012-1030 ◽  
Author(s):  
Wing Him Yeung ◽  
Camillo Lento
Keyword(s):  
Stock Price ◽  
Design Methodology ◽  
Crash Risk ◽  
Earnings Forecast ◽  
Content Type ◽  
Critical Thresholds ◽  
Unexpected Earnings ◽  
New Evidence ◽  
Earnings Thresholds ◽  
Earnings Change

Purpose The purpose of this paper is to examine stock price crash risk (SPCR) as a function of meeting or missing three earnings thresholds – reporting a profit (earnings level), reporting an earnings increase (earnings change) and meeting analysts’ forecasts (earnings expectation). Design/methodology/approach The authors rely upon the research design of Herrmann et al. (2011) to identify the incremental impact of the earnings level and earnings change benchmarks on SPCR, after controlling for the effects of meeting or missing analysts’ expectations. Findings The authors find that meeting analysts’ expectations is negatively associated with SPCR, and this relationship strengthens with the magnitude of the unexpected earnings. However, the authors find little evidence of incremental threshold effects to suggest that earnings level and earnings change benchmarks are critical thresholds with respect to SPCR. Our results are robust after including a number of control variables. Originality/value This study contributes to the literature that investigates determinants of SPCR while simultaneously providing new evidence to conclusions that analysts’ earnings forecast is at the top of the earnings benchmark hierarchy.

Family Firms and Stock Price Crash Risk

2019 ◽  
Vol 10 (4) ◽  
pp. 77-86
Author(s):  
Hae-Young Ryu ◽  
Soo-Joon Chae
Keyword(s):  
Stock Price ◽  
Family Firms ◽  
Crash Risk

Study on the Relation between Dividend and Stock Price Crash Risk

2018 ◽  
Vol 36 (4) ◽  
pp. 53-86
Author(s):  
Taejin Jung ◽  
Sang-Giun Yim
Keyword(s):  
Stock Price ◽  
Crash Risk
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