The impact of industry prosperity on stock price crash risk

Hanmei Di, Qingzhi Liu and Shanshan Liu

Finance Research Letters, 2025, vol. 81, issue C

Abstract: This paper analyzes the impact of industry prosperity on the risk of share price collapse among China's A-share listed companies from 2016 to 2022, focusing on the intermediary role of analysts' forecasting behavior. The study reveals that heightened industry prosperity decreases the risk of future share price collapses, primarily by attracting more analyst attention and improving investor sentiment. Notably, private firms' share price crash risk is more sensitive to industry sentiment than state-owned enterprises, potentially due to differences in business strategies and risk tolerance. The findings contribute to the understanding of stock price crash risk factors and offer valuable insights for investors and regulators.

Keywords: Industry prosperity; Analysts' forecast; Stock price crash risk (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:81:y:2025:i:c:s1544612325006294

DOI: 10.1016/j.frl.2025.107369

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