Shareholder coordination and stock price crash risk

Wen Bo and Xiaoyang Yang

Finance Research Letters, 2024, vol. 67, issue PB

Abstract: We construct an indicator of shareholder coordination and investigate its impact on stock price crash risk. We find that shareholder coordination constrains stock price crash risk. Mechanism analysis suggests that this effect is achieved by alleviating agency conflicts and improving the quality of information disclosure. In addition, we find that the role of shareholder coordination in mitigating crash risk is more pronounced in companies with stronger external monitoring capabilities and stronger shareholder long-termism tendencies. In summary, our results suggest that shareholder coordination is instrumental in monitoring management behavior and mitigating bad news hoarding practices within companies.

Keywords: Geographic concentration; Shareholder coordination; Stock price crash risk; Monitoring; Information disclosure quality (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:67:y:2024:i:pb:s1544612324009462

DOI: 10.1016/j.frl.2024.105916

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