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Policy synergy on stock price crash risk: An intergovernmental perspective

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Listed:
  • Liao, Yinchao
  • Wang, Jun
  • Liao, Lei
  • Shu, Xiaoyang
  • Peng, Tao

Abstract

Both central and local government policies present implications for companies and investors. While several studies evidence that government policies shape corporate behaviors, few studies have explored them from an intergovernmental view. This research constructs a new measurement of intergovernmental policy synergy with text-based tools and reveals an inverted U-shaped relation between central-local policy synergy and stock price crash risk, which still holds after checking robustness. Furthermore, we validate corporate greenwashing and divergence of investors’ opinion as underlying mechanisms. Additionally, the relation is more prominent among firms without online interactive platform and firms with high web search intensity.

Suggested Citation

  • Liao, Yinchao & Wang, Jun & Liao, Lei & Shu, Xiaoyang & Peng, Tao, 2024. "Policy synergy on stock price crash risk: An intergovernmental perspective," Finance Research Letters, Elsevier, vol. 67(PA).
    • Handle: RePEc:eee:finlet:v:67:y:2024:i:pa:s1544612324007748
    DOI: 10.1016/j.frl.2024.105744
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    References listed on IDEAS

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    More about this item

    Keywords

    Intergovernmental relations; Stock price crash risk; Institutional complementarity; Institutional inconformity;
    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
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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