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Cost Stickiness and Stock Price Crash Risk: Evidence from China

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  • Liang Tang
  • Yiyang Huang
  • Jiali Liu
  • Xiangyu Wan

Abstract

Sticky cost will enhance variety of firms’ performance and uncertainty, does sticky cost list company increase or decrease stock price crash risk? Due to information and expected concerns, investors will consider sticky cost as companies’ capacity and risk. We examine the effect of sticky cost on firms’ stock price crash risk and find a negative association. This association mainly exists in firms with younger CEO, high level of product market competition, lower finance risk, poor performance, state-owned and concentrated ownership. We conclude that the sticky cost reduces the stock price crash risk. The conclusions have theoretical and practical significance for corporate governance and corporate strategy.

Suggested Citation

  • Liang Tang & Yiyang Huang & Jiali Liu & Xiangyu Wan, 2022. "Cost Stickiness and Stock Price Crash Risk: Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 58(2), pages 544-569, January.
    • Handle: RePEc:mes:emfitr:v:58:y:2022:i:2:p:544-569
    DOI: 10.1080/1540496X.2020.1787148
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    Cited by:

    1. Cen, Tao, 2023. "Green finance reform and stock price crash risk: Evidence from Chinese heavily polluting companies," Finance Research Letters, Elsevier, vol. 56(C).
    2. Jeon, Heung-Jae, 2024. "CEO narcissism and asymmetric cost behavior," The North American Journal of Economics and Finance, Elsevier, vol. 70(C).
    3. Sun, Yu & Gong, Hui, 2023. "Firm financialization and cost stickness behavior," Finance Research Letters, Elsevier, vol. 57(C).

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