Business strategy and stock price crash risk: international evidence

Weidong Xu, Yijie Chen, Xin Gao and Yi Wang

Applied Economics, 2023, vol. 55, issue 10, 1098-1113

Abstract: Employing a large international sample spanning from 1985 to 2017 (i.e. 65,774 firm-year observations), this paper examines the relationship between business strategy and stock price crash risk. Empirical results suggest that prospective business strategy is significantly and positively related to stock price crash risk, in line with the ‘bad news hoarding hypothesis’. Further research shows that in companies with higher information asymmetry or more overconfident CEOs, prospective business strategy has a larger positive impact on stock price crash risk. In addition, the above positive effects are more significant in countries with higher individualism, lower power distance, and weaker uncertainty avoidance. Our results remain after a battery of robustness checks.

Date: 2023
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1080/00036846.2022.2096860 (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:applec:v:55:y:2023:i:10:p:1098-1113

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEC20

DOI: 10.1080/00036846.2022.2096860

Access Statistics for this article

Applied Economics is currently edited by Anita Phillips

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