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Article
MANAGERIAL OWNERSHIP AND STOCK PRICE CRASH RISK: EVIDENCE FROM CHINA
Qinghua Huang, Ye Liu, Fangfang Zhang, Xiding Chen
ABSTRACT. Managerial ownership induces executives to conceal unfavourable news and choose bad investment projects, which in turn increases stock price crashes. Using China's listed firms from 2004 to 2014 as the sample, we find managerial ownership has positive and significant influence on stock price crash risk. Moreover, the positive influence of managerial ownership on crash risk is strengthened when the firms have higher agency cost, namely those with relatively higher administrative expense ratio, lower asset utilization ratio, and lower market competition .
KEYWORDS: managerial ownership, crash risk, agency cost, governance.