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Information centralization and stock price crash risk: Cross-country evidence

Author

Listed:
  • Dong, Wenyi
  • Gao, Xin
  • Li, Donghui
  • Yang, Shijie

Abstract

Our study investigates whether access to corporate disclosure via a national database affects stock price crash risk. Exploiting the staggered implementation of national databases for corporate information dissemination (Officially Appointed Mechanisms, or OAMs) in the European Union countries, we find that stock price crash risk significantly decreases after regulated information disclosed by companies is required to be compiled in OAMs. Consistent with the notion that the centralization of regulated information allows investors to search and compare corporate disclosure across peer firms, we find that the observed effect is more pronounced in firms with more peer firms in the same industry. Further analyses show that this effect is stronger in firms with less transparent information environments and with more retail investors. Collectively, our study sheds light on the role of Regtech adoption in mitigating stock price crash risk.

Suggested Citation

  • Dong, Wenyi & Gao, Xin & Li, Donghui & Yang, Shijie, 2024. "Information centralization and stock price crash risk: Cross-country evidence," International Review of Financial Analysis, Elsevier, vol. 96(PA).
    • Handle: RePEc:eee:finana:v:96:y:2024:i:pa:s1057521924005179
    DOI: 10.1016/j.irfa.2024.103585
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    More about this item

    Keywords

    Country-level institutions; Officially appointed mechanisms; Stock price crash risk; Information processing costs;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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