scholarly journals Financial Environment and Risk of Stock Price Crash

2021 ◽  
Vol 5 (2) ◽  
pp. p1
Author(s):  
Xie Shuangze ◽  
Xu Xinpeng
Keyword(s):  
Negative Correlation ◽  
Stock Price ◽  
Listed Company ◽  
Significant Negative Correlation ◽  
Listed Companies ◽  
Crash Risk ◽  
The Impact ◽  
Financial Environment

The risk of stock price crash has become an important topic in the field of macroeconomics and micro-finance in recent years, but there are relatively few researches on the risk of stock price crash from an external perspective. Therefore, this paper takes China’s GEM listed companies as samples to empirically test the impact of financial environment on stock price crash risk. The research finds that there is a significant negative correlation between the financial environment and the risk of stock price crash, that is, the better the financial environment of the GEM listed company is, the lower the risk of stock price crash is. This conclusion still exists after controlling for the conservatism and endogenicity.

The impact of product market competition on stock price crash risk

2020 ◽  
Vol 35 (7) ◽  
pp. 1141-1153
Author(s):  
Jia Li ◽  
Zhengying Luo
Keyword(s):  
Stock Price ◽  
Market Competition ◽  
Product Market ◽  
Listed Companies ◽  
Product Market Competition ◽  
Crash Risk ◽  
Competitive Position ◽  
Content Type ◽  
Industry Competition ◽  
The Impact

Purpose The purpose of this paper is to explore the impact of product market competition on the risk of stock price crash based on the degree of industry competition and the competitive position of enterprises. Design/methodology/approach This paper chooses the data of Shanghai and Shenzhen A-share listed companies from 2009 to 2017 as samples and uses a threshold regression model to explore the impact of product market competition on the risk of a stock price crash. Findings The results show that: the overall level of industry competition is negatively correlated with the risk of stock price crash; the competitive position of enterprises and the risk of a stock price crash. The correlation is not significant: for high competitive enterprises, the degree of industry competition is negatively correlated with the risk of stock price crash; for low competitive enterprises, the degree of industry competition is positively correlated with the risk of a stock price crash and the conclusions obtained have passed the robustness test. Originality/value This paper not only enriches the literature on the relationship between product market competition and the risk of stock price crash but also has reference significance for supervisors to allocate resources to supervise information disclosure of listed companies.

scholarly journals Social Responsibility, Institutional Environment and Stock Price Crash Risk: Evidence from Chinese GEM

2021 ◽  
Vol 9 (2) ◽  
pp. p1
Author(s):  
Zhou Yuying ◽  
Wang Yuyu
Keyword(s):  
Social Responsibility ◽  
Stock Price ◽  
Institutional Environment ◽  
Listed Companies ◽  
Crash Risk ◽  
First Year ◽  
Real Economy ◽  
Inhibiting Effect ◽  
Growth Enterprise Market ◽  
The Impact

The stock price crash risk has become the focus of corporate finance and macroeconomics research in recent years because it affects the stock market, listed companies, market investors and the real economy. This paper takes 1822 gem listed companies from 2011 to 2017 as samples, and empirically tests the impact of social responsibility on the risk of stock price collapse and takes into account the regulatory effect of institutional environment. The study finds that social responsibility can inhibit the stock price collapse risk of listed companies on the growth enterprise market, and the institutional environment can also inhibit the risk of stock price collapse of listed companies on the growth enterprise market. Considering the influence of the institutional environment, the influence of social responsibility on the risk of stock price collapse of listed companies on the growth enterprise market is more obvious, which shows that the institutional environment has a moderating effect between social responsibility and the risk of stock price collapse. This conclusion still exists after considering the endogenous influence. Further research shows that the inhibiting effect of social responsibility and the regulating effect of institutional environment are more obvious among gem listed companies in the first year of listing.

TARGETED POVERTY ALLEVIATION AND STOCK PRICE CRASH RISK: EVIDENCE FROM CHINA

2021 ◽  
pp. 1-31
Author(s):  
SHOUDONG CHEN ◽  
YUESHAN LI
Keyword(s):  
Poverty Alleviation ◽  
Stock Price ◽  
Listed Companies ◽  
Bad News ◽  
Crash Risk ◽  
Public Company ◽  
The Government ◽  
The Impact ◽  
Role Of Information

Using manually collected samples on voluntary targeted poverty alleviation of 3418 Chinese firms for the period 2016–2019, we explore the impact of targeted poverty alleviation actions of listed companies on the stock price crash risk. Results show that listed companies participating in targeted poverty alleviation exhibited a lower risk of stock price crash risk; this conclusion is still valid after a series of robustness and endogeneity tests. This paper further explored its internal transmission routes. We found that the response of a public company to the targeted poverty alleviation policy will increase its positive coverages and plays the role of information intermediary and public supervision of media. Thus, the company’s behavior of hiding bad news is curtailed, and its future stock price crash risk is significantly reduced. For the government, China’s targeted poverty alleviation strategy is worthy of reference, while getting rid of poverty, the stock price crash risk of participating companies has also been effectively suppressed.

scholarly journals The Influence of Trading Locations on Equity Returns

2016 ◽  
Vol 12 (12) ◽  
pp. 188
Author(s):  
Nguyen N.T. Vo
Keyword(s):  
Risk Premium ◽  
Stock Price ◽  
Listed Companies ◽  
Equity Returns ◽  
Stock Exchanges ◽  
Home Market ◽  
Trade Effect ◽  
Market Index ◽  
Highly Correlated ◽  
The Impact

This paper evaluates the impact of trading locations on equity returns by examining the stock price behaviour of three Anglo-Dutch dual-listed companies which result from mergers where two corporations agree to function as a single operating business, but maintain separate identities. The shares of these stocks are traded not only in their home market but also on several US stock exchanges in the form of American Depository Receipts. Regressing the return differentials on these dual-listed and cross-listed stocks on the relative market index returns and currency changes provides evidence of an apparent violation of the Law of One Price. The regression results show that the return on each part of dual-listed companies is highly correlated with the market on which it is most intensively traded. Similarly, returns on cross-listed stocks have considerably higher co-movement with US market indices and considerably lower co-movement with home-market indices than their home-market counterparts. Market risk premium is not a significant explanatory variable of the location of trade effect.

scholarly journals Prediction and Empirical Study of Stock Yield Volatility Based on Event Study

2020 ◽  
Vol 214 ◽  
pp. 02023
Author(s):  
Shen Mingcai ◽  
Liu Xin ◽  
Huang Xi ◽  
Cao Zhaohuan ◽  
Su Ganya
Keyword(s):  
Stock Market ◽  
Stock Price ◽  
Listed Company ◽  
Investment Decision ◽  
Practical Significance ◽  
Event Window ◽  
Future Return ◽  
Internal Relations ◽  
The Impact ◽  
Source Of Information

Stock market event is an important source of information for investment decision, and it is of practical significance to quantify the event and predict the fluctuation range of future return under such event. Most researchers study stock market events horizontally, that is, to study the impact of a current event on the stock price of a certain sector or industry, while the paper attempts to study vertically the impact of a certain event of a single listed company on the return. Based on the internal relations between public announcement and stock yield of listed companies, the paper deduced the daily yield prediction model of event window by VAR(p) to exclude subjective “estimation” in the past and verifies the feasibility of the model.

scholarly journals Management equity incentives and stock price crash risk: “Golden handcuffs” or “gold watch”

PLoS ONE ◽  
2021 ◽  
Vol 16 (4) ◽  
pp. e0249900
Author(s):  
Xiaohua Zhou ◽  
Jinshi Wan ◽  
Yi Yang ◽  
Xiangyu Gan
Keyword(s):  
Peer Effects ◽  
Stock Price ◽  
Listed Companies ◽  
Mediation Effect ◽  
Crash Risk ◽  
Mediating Effects ◽  
Equity Incentives ◽  
Region 10 ◽  
The Relationship ◽  
A Share

This paper expands the previous research on management equity incentives (MEIs) and stock price crash risk by distinguishing between the "gold watch" region and the "golden handcuff" regions in MEIs. By using an estimation of the gold watch region and the golden handcuff regions based on 6,675 annual observations of China’s A-share listed companies, the stock price crash risk is found to be negatively correlated with MEIs in the golden handcuff regions (0–10%, 30%-100%) and is positively correlated with MEIs in the gold watch region (10%-30%). A further investigation of the mediating effects of peer effects on MEIs and the stock price crash risk reveals that peer effects have a partial mediation effect at the level of peer managers’ shareholding and mediate the relationship between MEIs and the stock price crash risk.

Does negative information in MD&A can reduce stock crash risk?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jianmai Liu
Keyword(s):  
Information Asymmetry ◽  
Information Disclosure ◽  
Stock Price ◽  
Negative Information ◽  
Bad News ◽  
Practical Significance ◽  
Crash Risk ◽  
Content Type ◽  
The Impact

Purpose As an important part of the disclosure of listed companies' annual reports, MD&A will disclose some "bad news" about the company. The purpose of this paper is to study whether such "bad news" can reduce information asymmetry and alleviate the risk of stock price crash remains to be seen. Design/methodology/approach Based on the sample of A-share listed companies from 2007 to 2016, the authors examine whether the negative information in MD&A could reduce stock price crash risk. Findings It is found that the negative information in MD&A does not reduce future crash, which indicates that the negative information in MD&A does not alleviate the information asymmetry. Further, it is also found this is due to the low readability of negative information which leads to the negative information not successfully released into the market timely. Only highly readable negative information can alleviate information asymmetry and suppress crash risk. In addition, the authors also find in the companies with more investor surveys negative tone is negatively correlated with crash risk, which means that investor surveys could help investors interpret the negative information in MD&A and alleviate stock price crash risk. Practical implications The practical significance of this article: this paper suggests that investors should carefully identify the quality of negative information in MD&A and pay attention to other quality characteristics besides credibility. This paper suggests that the regulator should pay attention not only to whether to disclose and the amount of disclosure but also to the quality of information disclosure, such as readability, so as to restrict management's strategic behavior in information disclosure. Originality/value First, different from previous studies on the impact of information disclosure on crash risk, this paper directly explores the impact of information in MD&A on stock price crash risk from the perspective of negative information disclosure that management most want to hide. It supplements the literature on the impact of information disclosure on stock price crash risk. Second, this paper studies the interaction between information tone and readability and its impact on the risk of stock price crash. Some studies believe that the credibility of negative news is higher and investors' reaction may be stronger. However, this paper finds that the disclosure of negative information may not be absorbed by the market because of the low readability. Third, this paper finds that investor surveys can help information users to interpret negative information and alleviate the risk of stock price crash, which shows that information disclosure of different channels will complement each other and improve information efficiency. Therefore, it advocates different information disclosure channels which has important practical significance for improving market pricing efficiency and reducing investment decision-making risk.

scholarly journals Employee stock ownership plan and stock price crash risk

2019 ◽  
Vol 13 (1) ◽  
Author(s):  
Yan Li ◽  
Bao Sun ◽  
Shangyao Yu
Keyword(s):  
Legal System ◽  
Information Disclosure ◽  
Stock Price ◽  
Crash Risk ◽  
Stock Ownership ◽  
Investor Confidence ◽  
Employee Stock Ownership ◽  
Future Value ◽  
The Impact ◽  
Employee Stock Ownership Plan

Abstract This paper examines whether the announcement of an employee stock ownership plan (ESOP) affects stock price crash risk and the mechanism by which the ESOP may influence crash risk, using a sample of Chinese A-share firms from the period 2014 to 2017. We provide evidence that an ESOP announcement is significantly and negatively related to a firm’s stock price crash risk. An ESOP announcement sends positive signals to the market that insiders are optimistic about a firm’s future value, which helps enhance investor confidence, resist the pressure for a fire sale caused by negative information disclosure, and reduce stock price crash risk. Further research shows that larger-scale, lower-priced and non-leveraged ESOPs are more helpful in reducing crash risk. This paper sheds lights on the impact of ESOPs in a volatile market environment. It also contributes to firms’ implementation of ESOPs and the development of the legal system in capital markets.

scholarly journals The Impact of International Oil Prices on the Stock Price Fluctuations of China’s Renewable Energy Enterprises

Energies ◽  
2019 ◽  
Vol 12 (24) ◽  
pp. 4630 ◽  
Author(s):  
Cody Yu-Ling Hsiao ◽  
Weishun Lin ◽  
Xinyang Wei ◽  
Gaoyun Yan ◽  
Siqi Li ◽  
...  
Keyword(s):  
Renewable Energy ◽  
Stock Prices ◽  
Stock Price ◽  
Capital Investment ◽  
Spillover Effect ◽  
Oil Prices ◽  
Listed Companies ◽  
Oil Price ◽  
Price Fluctuations ◽  
The Impact

In order to address a series of issues, including energy security, global warming, and environmental protection, China has ranked first in global renewable investment for the seventh consecutive year. However, developing a renewable energy industry requires a significant capital investment. Also, the international oil price fluctuations have an important impact on the stock prices of renewable energy firms. Thus, in order to provide implications for market investment as well as policy recommendations, this paper studied the spillover effect of international oil prices on the stock prices of China’s renewable energy listed companies. We used a Vector Autoregressive (VAR) model with innovations using a Factor-GARCH (Generalized Autoregressive Conditional Heteroskedasticity) process to evaluate the impact of market co-movements and time-varying volatility and correlation between the international oil price and China’s renewable energy market. The results show that the international oil price has a significant price spillover effect on the stock prices of China’s renewable energy listed companies. Moreover, the fluctuations of international oil prices have an influence on the stock price variations of Chinese renewable energy listed companies.

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