 Industry cash flow volatility and stock price crash riskBing Wang, Kung‐Cheng Ho, Xinyu Liu and Yan Gu Managerial and Decision Economics, 2022, vol. 43, issue 2, 356-371 Abstract: This study examines the effect of industry cash flow volatility on the risks of stock price crash by investigating Chinese A‐share listed companies from 2005 to 2015. Findings reveal that increases in the degree of volatility in industry cash flow significantly increase the risk of a stock price crash, and the conclusion remains valid after the robustness test. Further empirical research reveals that a higher level of product market competition and a higher level of policy uncertainty increase the positive effect of industry cash flow volatility on stock price crash risks, which confirms the moderating effect of product market competition and policy uncertainty. The effect of reducing the degree of accounting conservatism and increasing the optimism of analysts' earnings forecasts is analyzed and revealed as interim steps in the mechanism of the effect of industry cash flow volatility on the company's stock price crash risk. Overall, this evidence highlights the severe consequence of industry cash flow volatility on crash risks, which should encourage researchers, investors, and regulators to address the management of industry cash flow volatility. Date: 2022 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:43:y:2022:i:2:p:356-371 Access Statistics for this article Managerial and Decision Economics is currently edited by Antony Dnes More articles in Managerial and Decision Economics from John Wiley & Sons, Ltd. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.