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Shareholder coordination and stock price crash risk

Author

Listed:
  • Bo, Wen
  • Yang, Xiaoyang

Abstract

We construct an indicator of shareholder coordination and investigate its impact on stock price crash risk. We find that shareholder coordination constrains stock price crash risk. Mechanism analysis suggests that this effect is achieved by alleviating agency conflicts and improving the quality of information disclosure. In addition, we find that the role of shareholder coordination in mitigating crash risk is more pronounced in companies with stronger external monitoring capabilities and stronger shareholder long-termism tendencies. In summary, our results suggest that shareholder coordination is instrumental in monitoring management behavior and mitigating bad news hoarding practices within companies.

Suggested Citation

  • Bo, Wen & Yang, Xiaoyang, 2024. "Shareholder coordination and stock price crash risk," Finance Research Letters, Elsevier, vol. 67(PB).
    • Handle: RePEc:eee:finlet:v:67:y:2024:i:pb:s1544612324009462
    DOI: 10.1016/j.frl.2024.105916
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