The impact of rollover restriction on stock price crash risk
Xiaoxiao Wang and
Pacific-Basin Finance Journal, 2022, vol. 74, issue C
This study investigates the impact of short-term loan rollover restrictions on stock price crash risk using a quasi-natural experiment of China's 2007 regulatory change. Our baseline results show that the rollover restriction reduces stock price crash risk. This effect is more pronounced for firms with higher agency costs or firms with a higher risk of government intervention. Transmission mechanism tests support the idea that rollover restrictions decrease stock price crash risk through information asymmetry and agency cost channels via enhanced monitoring. However, the rollover restriction also leads to a higher liquidity risk, although it does not dominate.
Keywords: Loan rollover; Debt maturity; Stock price crash risk; Information asymmetry; Agency costs (search for similar items in EconPapers)
JEL-codes: G12 G14 G21 G28 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:74:y:2022:i:c:s0927538x22000919
Access Statistics for this article
Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee
More articles in Pacific-Basin Finance Journal from Elsevier
Bibliographic data for series maintained by Catherine Liu ().