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The association between political connection and stock price crash risk: Using financial reporting quality as a moderator

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  • Fang, Tzu-Yi
  • Lin, Fengyi
  • Lin, Sheng-Wei
  • Huang, Yi-Hua

Abstract

•This paper examines how political connections (PCs) can exacerbate the managerial hoarding of negative news and subsequently affect the risk appertaining to a stock price crash.•The present study also extends recent research on the PCs–financial reporting connection through an evaluation of said risk.•Compared with other types of risk, crash risk uniquely has a direct economic impact on investors. Thus, investors seeking to make investment decisions and manage their risks must understand the crash risk.

Suggested Citation

  • Fang, Tzu-Yi & Lin, Fengyi & Lin, Sheng-Wei & Huang, Yi-Hua, 2020. "The association between political connection and stock price crash risk: Using financial reporting quality as a moderator," Finance Research Letters, Elsevier, vol. 34(C).
    • Handle: RePEc:eee:finlet:v:34:y:2020:i:c:s1544612319302715
    DOI: 10.1016/j.frl.2019.08.015
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    References listed on IDEAS

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    Cited by:

    1. Rocca, Maurizio La & Fasano, Francesco & Cappa, Francesco & Neha, Neha, 2022. "The relationship between political connections and firm performance: An empirical analysis in Europe," Finance Research Letters, Elsevier, vol. 49(C).
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    3. Budi Wahyono, 2023. "Do political connections affect the market reaction to firms’ inclusion in or exclusion from the Sharia index?," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 13(4), pages 835-854, December.
    4. Wu, Keping & Fu, Yumei & Kong, Dongmin, 2022. "Does the digital transformation of enterprises affect stock price crash risk?," Finance Research Letters, Elsevier, vol. 48(C).

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