Heterogeneous Institutional Investors, Short Selling and Stock Price Crash Risk: Evidence from China

Fenghua Wen, Longhao Xu, Bin Chen, Xiao-Hua Xia and Jinyi Li

Emerging Markets Finance and Trade, 2020, vol. 56, issue 12, 2812-2825

Abstract: This study investigates the relation between heterogeneous institutional investors and stock price crash risk, then explores the effect of short selling on the relationship. By using a dataset of 1064 firms from China for the 2007–2015 period, we find that different from the developed countries, in China both grey and independent institutional investors have positive effects on the stock price crash risk. Moreover, we also discover that for firms without short selling ban, positive correlation between grey institutional investors and stock price crash risk is weaker, while the relationship between independent institutional investors and the crash risk is not affected.

Date: 2020
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DOI: 10.1080/1540496X.2018.1522588

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