Equity Incentives and Crash Risk in China’s A-Share Market

Jiahua Xu

Asia-Pacific Journal of Risk and Insurance, 2019, vol. 13, issue 1, 18

Abstract: This paper examines the relationship between equity incentives and stock price crash risk in China’s A-Share Market, and finds a significantly positive relationship between equity incentives and crash risk. This result holds true when only executives’ incentives are involved, while the significance fades once non-managerial personnel’s incentives are considered, indicating a tendency for managers to manipulate the stock price when their interests are tied to the market value of the stock. This manipulation, however, can cause the stock price to suffer in subsequent years.

Keywords: equity incentive; stock price crash; risk; agency problem (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1515/apjri-2018-0025

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