Large blockholders and stock price crash risk: An international study
Article
Eugster, Nicolas and Wang, Qingxia (Jenny). 2023. "Large blockholders and stock price crash risk: An international study." Global Finance Journal. 55. https://doi.org/10.1016/j.gfj.2022.100799
Article Title | Large blockholders and stock price crash risk: An international study |
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ERA Journal ID | 18372 |
Article Category | Article |
Authors | Eugster, Nicolas and Wang, Qingxia (Jenny) |
Journal Title | Global Finance Journal |
Journal Citation | 55 |
Article Number | 100799 |
Number of Pages | 25 |
Year | 2023 |
Publisher | Elsevier |
Place of Publication | Netherlands |
ISSN | 1044-0283 |
1873-5665 | |
Digital Object Identifier (DOI) | https://doi.org/10.1016/j.gfj.2022.100799 |
Web Address (URL) | https://www.sciencedirect.com/science/article/pii/S1044028322001016 |
Abstract | This study examines the relationship between large blockholders and stock price crash risk across 44 countries. Based on the results, firms held by large blockholders have a lower firm-specific crash risk than widely held firms. In this case, the higher the proportion of voting rights, the lower the risk. In addition, the negative association is more pronounced in firms undertaking overinvestment activities. The findings also suggest that large shareholders serve as monitors in firms, reducing agency costs and leading to lower stock price crash risk. Meanwhile, this mitigating effect is stronger in firms held by a family, another widely held corporation, and the state. Conversely, the results show no such effect in firms held by a large institutional investor. Finally, the relationship is more pronounced in developed countries and in English common law and German civil law countries, thus highlighting the role of large blockholders as a complementary governance mechanism, rather than a substitutive one. |
Keywords | Agency costs; Stock price crash risk ; Large blockholders ; Ownership structure ; Ownership structure |
ANZSRC Field of Research 2020 | 350202. Finance |
Public Notes | Files associated with this item cannot be displayed due to copyright restrictions. |
Byline Affiliations | University of Queensland |
Centre for Applied Climate Sciences |
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https://research.usq.edu.au/item/z25v1/large-blockholders-and-stock-price-crash-risk-an-international-study
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