The Driving Factors of Stock Price Crash Risk

Shuhua Zhang ()
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Shuhua Zhang: University of Glasgow, Adam Smith Business School

A chapter in Proceedings of the 3rd International Conference on Economic Development and Business Culture (ICEDBC 2023), 2024, pp 718-723 from Springer

Abstract: Abstract Factors that increase the likelihood of a stock market collapse are examined in this study via a review of the empirical literature. We focus on the main drivers relating to the potential for a decline in stock prices, including market factors, variables that are unique to the company, and those that are industry- and country-wide factors. Our findings suggest that there is a multi-faceted phenomenon linked to the potential fall of stock prices. The likelihood of a stock price fall is heavily influenced by market parameters including liquidity, market capitalization, and volatility. Similarly, firm-specific factors, such as leverage, leverage ratio, and firm size, have a significant impact on stock price crash risk. Finally, macroeconomic factors, such as GDP growth, inflation rate, and exchange rate, are also found to be important factors that might cause a stock market meltdown. In conclusion, the danger of a fall in stock prices is influenced by a wide range of circumstances and is itself a complicated and multi-faceted phenomenon.

Keywords: investor moods; macroeconomic conditions; and economic growth (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-246-0_86

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DOI: 10.2991/978-94-6463-246-0_86

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