Stakeholder orientation and stock price crash risk

You Li and Jian Zhang

Finance Research Letters, 2020, vol. 37, issue C

Abstract: This paper examines the asset pricing implication of stakeholder orientation. We exploit the staggered adoption of constituency statues across U.S. states as an exogenous source of variation in stakeholder orientation. The enactment of constituency statues leads to a significant decrease in firm's stock price crash risk relative to comparable firms in non-affected states. Moreover, the negative impact on firm's crash risk only shows up after the stakeholder orientation recognition and thus is unlikely driven by unobservable economic conditions. Overall, the findings are consistent with the view that stakeholder orientation is value-enhancing and helps to curb bad-news-hoarding activities.

Keywords: Stakeholder orientation; Crash risk; Disclosure (search for similar items in EconPapers)
JEL-codes: G12 J61 M54 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:37:y:2020:i:c:s1544612319301692

DOI: 10.1016/j.frl.2019.101370

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