Product market competition, corporate governance and stock price crash risk: Evidence from China

Xiaojia Zheng, Xuebin Zhang, Ge Yang and Liqing Wang

Applied Economics Letters, 2024, vol. 31, issue 12, 1150-1158

Abstract: We investigate the relationship between product market competition and internal corporate governance from the perspective of stock price crash risk using a sample of Chinese A-share listed firms from 2003 to 2014. We find that product market competition significantly decreases stock price crash risk and this effect is more pronounced for firms with poor corporate governance (i.e. state-owned enterprises (SOEs), firms with remote independent directors, and firms with lower managerial ownership). This pattern of evidence suggests that product market competition, as an external governance mechanism can substitute poor internal corporate governance by disciplining insiders’ information hoarding and thus lead to lower stock price crash risk. The further finding that market competition improves information quality supports the information hoarding channel. Our findings hold up to a battery of robustness checks and endogeneity tests.

Date: 2024
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://hdl.handle.net/10.1080/13504851.2023.2176441 (text/html)
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:taf:apeclt:v:31:y:2024:i:12:p:1150-1158

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEL20

DOI: 10.1080/13504851.2023.2176441

Access Statistics for this article

Applied Economics Letters is currently edited by Anita Phillips

More articles in Applied Economics Letters from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().