Targeting poverty alleviation and stock price crash risk

Xuanyi Shi, Yongjia Lin and Yizhi Wang

Finance Research Letters, 2024, vol. 69, issue PB

Abstract: This study explores how participation in the Targeted Poverty Alleviation (TPA) program impacts the risk of stock price crashes among Chinese listed companies. The analysis demonstrates a significantly positive effect of TPA participation on price crash risk, with the results remaining robust across various tests. Mechanism analysis indicates that firms involved in the TPA campaign engage in higher earnings management, concealing negative information to maintain a positive reputation, which could trigger a price crash when the information is eventually disclosed. Moreover, we find that the effect of the TPA campaign is significantly stronger in companies with less institutional ownership.

Keywords: Target poverty alleviation; Stock price crash risk; Chinese stock market (search for similar items in EconPapers)
JEL-codes: G14 G32 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:69:y:2024:i:pb:s1544612324011887

DOI: 10.1016/j.frl.2024.106159

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