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Stakeholder orientation and stock price crash risk

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  • Li, You
  • Zhang, Jian

Abstract

This paper examines the asset pricing implication of stakeholder orientation. We exploit the staggered adoption of constituency statues across U.S. states as an exogenous source of variation in stakeholder orientation. The enactment of constituency statues leads to a significant decrease in firm's stock price crash risk relative to comparable firms in non-affected states. Moreover, the negative impact on firm's crash risk only shows up after the stakeholder orientation recognition and thus is unlikely driven by unobservable economic conditions. Overall, the findings are consistent with the view that stakeholder orientation is value-enhancing and helps to curb bad-news-hoarding activities.

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  • Li, You & Zhang, Jian, 2020. "Stakeholder orientation and stock price crash risk," Finance Research Letters, Elsevier, vol. 37(C).
    • Handle: RePEc:eee:finlet:v:37:y:2020:i:c:s1544612319301692
    DOI: 10.1016/j.frl.2019.101370
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    3. Gu, Leilei & Zhang, Huilin, 2022. "Stakeholder-oriented corporate investment: A catering perspective," Finance Research Letters, Elsevier, vol. 48(C).

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    More about this item

    Keywords

    Stakeholder orientation; Crash risk; Disclosure;
    All these keywords.

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management

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