Employee treatment and stock price crash risk: evidence from China
Maochuan Wang,
Xixiong Xu and
Siqi Wang
International Journal of Emerging Markets, 2023, vol. 20, issue 7, 2957-2978
Abstract:
Purpose - This study aims to examine the impact of employee treatment on stock price crash risk in emerging markets. The study further sheds light on the economic channels and boundary conditions between employee treatment and crash risk. Design/methodology/approach - This study employs a large-scale archival dataset of Chinese A-share listed firms covering 2010 to 2021. To establish causality, the study leverages multi-way fixed effects, Oster’s test, change regression and instrumental variable methods to alleviate endogeneity concerns. Findings - The results reveal that employee-friendly treatment leads to a lower crash risk. Moreover, improving internal control quality and enhancing firm reputation appear to be the two plausible economic channels through which employee treatment mitigates crash risk. Cross-sectionally, the documented impact is more evident for human-capital-intensive firms, firms with weaker external monitoring and those operating in fiercely competitive industries. Originality/value - This study is among the first to show that employee treatment has a favorable consequence for shareholder benefit through reducing crash risk. The study thus adds to the ongoing debate regarding the relationship between employee treatment and shareholder wealth. The study also extends the nascent literature on the role of rank-and-file employees in shaping corporate information landscapes.
Keywords: Employee treatment; Stock price crash risk; Corporate social responsibility; China; G12; G14; G32; J20 (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:
Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:eme:ijoemp:ijoem-02-2023-0237
DOI: 10.1108/IJOEM-02-2023-0237
Access Statistics for this article
International Journal of Emerging Markets is currently edited by Prof Ilan Alon
More articles in International Journal of Emerging Markets from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().