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Does online interaction between firms and investors reduce stock price crash risk?

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  • Li, Yi
  • Wang, Pengfei
  • Zhang, Wei

Abstract

This paper examines how online interaction between firm management and investors impacts stock price crash risk. Based on the previous literature, we postulate that online interaction constrains crash risk via two channels, i.e., deterring bad news hoarding activities of managers and decreasing differences of opinion among investors. Relying on the launch of Hudongyi (the first official investor relations management platform in the world) for identification, we demonstrate that online firm-investor interaction significantly reduces future stock price crash risk and that these two channels can both explain this effect. Overall, our findings highlight the important role of online interaction in risk management.

Suggested Citation

  • Li, Yi & Wang, Pengfei & Zhang, Wei, 2023. "Does online interaction between firms and investors reduce stock price crash risk?," The British Accounting Review, Elsevier, vol. 55(4).
    • Handle: RePEc:eee:bracre:v:55:y:2023:i:4:s0890838922001081
    DOI: 10.1016/j.bar.2022.101168
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    3. Hanyu Zhang & Rong Ding & Hang Zhou, 2024. "Public access to in-house meeting reports and stock liquidity: evidence from China," Review of Quantitative Finance and Accounting, Springer, vol. 62(4), pages 1431-1458, May.

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    More about this item

    Keywords

    Online interaction; Stock price crash risk; Bad news hoarding; Investor disagreement;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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