IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v58y2023ipds1544612323009698.html
   My bibliography  Save this article

Stock price crash risk and cost of debt

Author

Listed:
  • Lou, Junchao
  • Li, Ruihong
  • Zhang, Tidong
  • Zhang, Yiling

Abstract

This paper takes corporate bonds issued by Chinese A-share listed companies from 2011 to 2021 as a sample to study the relationship and the mechanism of the relationship between stock price crash risk and debt financing cost. It is found that an increase in the risk of stock price crash will significantly increase the credit spread and issue size of corporate bond issuance; an increase in the risk of stock price crash does not have a significant effect on the expected probability of default and Z-value.

Suggested Citation

  • Lou, Junchao & Li, Ruihong & Zhang, Tidong & Zhang, Yiling, 2023. "Stock price crash risk and cost of debt," Finance Research Letters, Elsevier, vol. 58(PD).
    • Handle: RePEc:eee:finlet:v:58:y:2023:i:pd:s1544612323009698
    DOI: 10.1016/j.frl.2023.104597
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612323009698
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2023.104597?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Zaman, Rashid & Atawnah, Nader & Haseeb, Muhammad & Nadeem, Muhammad & Irfan, Saadia, 2021. "Does corporate eco-innovation affect stock price crash risk?," The British Accounting Review, Elsevier, vol. 53(5).
    2. Liu, Prof Haiyue & Wang, Yile & Xue, Dr Rui & Linnenluecke, Prof Martina & Cai, Dr Cynthia Weiyi, 2022. "Green Commitment and Stock Prick Crash Risk," Finance Research Letters, Elsevier, vol. 47(PA).
    3. Cheng, Feiyang & Chiao, Chaoshin & Fang, Zhenming & Wang, Chunfeng & Yao, Shouyu, 2020. "Raising short-term debt for long-term investment and stock price crash risk: Evidence from China," Finance Research Letters, Elsevier, vol. 33(C).
    4. Hu, Jinshuai & Li, Siqi & Taboada, Alvaro G. & Zhang, Feida, 2020. "Corporate board reforms around the world and stock price crash risk," Journal of Corporate Finance, Elsevier, vol. 62(C).
    5. Huang, Shoujun & Liu, Hezhe, 2021. "Impact of COVID-19 on stock price crash risk: Evidence from Chinese energy firms," Energy Economics, Elsevier, vol. 101(C).
    6. Zuo, Jingjing & Qiu, Baoyin & Zhu, Guoyiming & Lei, Guangyong, 2023. "Local speculative culture and stock price crash risk," Research in International Business and Finance, Elsevier, vol. 64(C).
    7. Obaydin, Ivan & Zurbruegg, Ralf & Hossain, Md Noman & Adhikari, Binay Kumar & Elnahas, Ahmed, 2021. "Shareholder litigation rights and stock price crash risk," Journal of Corporate Finance, Elsevier, vol. 66(C).
    8. Ma, Xiaofang & Wang, Wenming & Wu, Jiangang & Zhang, Wenlan, 2020. "Corporate customer concentration and stock price crash risk," Journal of Banking & Finance, Elsevier, vol. 119(C).
    9. 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).
    10. Kong, Dongmin & Shi, Lu & Zhang, Fan, 2021. "Explain or conceal? Causal language intensity in annual report and stock price crash risk," Economic Modelling, Elsevier, vol. 94(C), pages 715-725.
    11. Wu, Kai & Lai, Seiwai, 2020. "Intangible intensity and stock price crash risk," Journal of Corporate Finance, Elsevier, vol. 64(C).
    12. Lee, Sang Mook & Jiraporn, Pornsit & Song, Hakjoon, 2020. "Customer concentration and stock price crash risk," Journal of Business Research, Elsevier, vol. 110(C), pages 327-346.
    13. An, Zhe & Chen, Chen & Naiker, Vic & Wang, Jun, 2020. "Does media coverage deter firms from withholding bad news? Evidence from stock price crash risk," Journal of Corporate Finance, Elsevier, vol. 64(C).
    14. Jiang, Kangqi & Du, Xinyi & Chen, Zhongfei, 2022. "Firms' digitalization and stock price crash risk," International Review of Financial Analysis, Elsevier, vol. 82(C).
    15. Wen, Fenghua & Xu, Longhao & Ouyang, Guangda & Kou, Gang, 2019. "Retail investor attention and stock price crash risk: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 65(C).
    16. Fu, Junhui & Wu, Xiang & Liu, Yufang & Chen, Rongda, 2021. "Firm-specific investor sentiment and stock price crash risk," Finance Research Letters, Elsevier, vol. 38(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sun, Guanglin & Wang, Jiawei & Ai, Yongfang, 2024. "The impact of government green subsidies on stock price crash risk," Energy Economics, Elsevier, vol. 134(C).
    2. Wadhwa, Kavita & Goodell, John W., 2024. "Political uncertainty and stock price crash risk: Insights from state-elections in an emerging market," International Review of Financial Analysis, Elsevier, vol. 95(PB).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Liang, Zhentang & Zhao, Yunying, 2024. "Enterprise digital transformation and stock price crash risk," Finance Research Letters, Elsevier, vol. 59(C).
    2. Liangcheng Wang & Siying Li & Bikun Zhang & Yifan Zhang & Tao Peng, 2024. "The effect of auditor experience on stock price crash risk," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 64(1), pages 411-444, March.
    3. Wu, Yanghui, 2023. "Banking competition and stock price crash risk," Finance Research Letters, Elsevier, vol. 58(PB).
    4. Richardson, Grant & Obaydin, Ivan & Liu, Chelsea, 2022. "The effect of accounting fraud on future stock price crash risk," Economic Modelling, Elsevier, vol. 117(C).
    5. Kong, Xiaowei & Jin, Yifan & Liu, Lihua & Xu, Jialu, 2023. "Firms' exposures on COVID-19 and stock price crash risk: Evidence from China," Finance Research Letters, Elsevier, vol. 52(C).
    6. Wang, Liang & Wang, Qikai & Jiang, Fan, 2023. "Booster or stabilizer? Economic policy uncertainty: New firm-specific measurement and impacts on stock price crash risk," Finance Research Letters, Elsevier, vol. 51(C).
    7. Hossain, Ashrafee T. & Masum, Abdullah-Al & Xu, Jian, 2023. "COVID-19, a blessing in disguise for the Tech sector: Evidence from stock price crash risk," Research in International Business and Finance, Elsevier, vol. 65(C).
    8. Liu, LiHua & Li, YuQian, 2024. "Enterprise financialization and stock price crash risk," Finance Research Letters, Elsevier, vol. 60(C).
    9. Cui, Xin & Sensoy, Ahmet & Nguyen, Duc Khuong & Yao, Shouyu & Wu, Yiyao, 2022. "Positive information shocks, investor behavior and stock price crash risk," Journal of Economic Behavior & Organization, Elsevier, vol. 197(C), pages 493-518.
    10. Wang, Xiaoxiao & Liu, Haiming, 2022. "The impact of rollover restriction on stock price crash risk," Pacific-Basin Finance Journal, Elsevier, vol. 74(C).
    11. Cao, Feng & Zhang, Xueyan & Yuan, Rongli, 2022. "Do geographically nearby major customers mitigate suppliers’ stock price crash risk?," The British Accounting Review, Elsevier, vol. 54(6).
    12. Shi, Jinyan & Liu, Xu & Li, Yanxi & Yu, Conghui & Han, Yushan, 2022. "Does supply chain network centrality affect stock price crash risk? Evidence from Chinese listed manufacturing companies," International Review of Financial Analysis, Elsevier, vol. 80(C).
    13. Gong, Xu & Lin, Anlan & Chen, Xiaoqi, 2022. "CEO–CFO gender congruence and stock price crash risk in energy companies," Economic Analysis and Policy, Elsevier, vol. 75(C), pages 591-609.
    14. Lin, Boqiang & Wu, Nan, 2023. "Climate risk disclosure and stock price crash risk: The case of China," International Review of Economics & Finance, Elsevier, vol. 83(C), pages 21-34.
    15. Jin, Hong-min & Su, Zhong-qin & Wang, Lu & Xiao, Zuoping, 2022. "Do academic independent directors matter? Evidence from stock price crash risk," Journal of Business Research, Elsevier, vol. 144(C), pages 1129-1148.
    16. Tran, Vuong Thao & Phan, Dinh Hoang Bach & Tee, Chwee-Ming & Nguyen, Dat Thanh, 2024. "Unmasking the carbon conundrum: How emissions impact stock price crash risk," Finance Research Letters, Elsevier, vol. 64(C).
    17. Xiao, Jihong & Chen, Xian & Li, Yang & Wen, Fenghua, 2022. "Oil price uncertainty and stock price crash risk: Evidence from China," Energy Economics, Elsevier, vol. 112(C).
    18. Ruwei Zhao & Ruixin Fan & Xiong Xiong & Jianli Wang & Jitka Hilliard, 2023. "Media Tone and Stock Price Crash Risk: Evidence from China," Mathematics, MDPI, vol. 11(17), pages 1-14, August.
    19. Su, Shiwei & Jia, Songbo & Shi, Guangping, 2023. "Leverage adjustment behaviors and stock price crash risk," Finance Research Letters, Elsevier, vol. 56(C).
    20. Cheng, Feiyang & Wang, Chunfeng & Chiao, Chaoshin & Yao, Shouyu & Fang, Zhenming, 2021. "Retail attention, retail trades, and stock price crash risk," Emerging Markets Review, Elsevier, vol. 49(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:58:y:2023:i:pd:s1544612323009698. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.