Explain or conceal? Causal language intensity in annual report and stock price crash risk

Kong, Dongmin; Shi, Lu; Zhang, Fan

doi:10.1016/j.econmod.2020.02.013

Cited by 52 publications

(17 citation statements)

References 41 publications

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“…To test above prediction, referring to prior research [35], this paper divides the sample into two groups (good news and bad news) based on the earnings per share (EPS) predicted by analysts.…”

Section: Itical Link and Crash Riskmentioning

confidence: 99%

“…Based on existing research [35][36], this paper recalculate W it , and calculate crash risk based on model (2) and model (3).…”

Section: Different Measure Of Crash Riskmentioning

confidence: 99%

“…Referring to [35], considering the effect of the 2008 financial crisis on stock market, the year sample of 2008 is excluded. Column (3) and column (4) in Table VIII presents that the coefficient on PC is pronounced, which shows that the research conclusions are robust.…”

Section: Change Sample Periodsmentioning

confidence: 99%

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Do Political Connections Affect Stock Price Crash Risk-Based on Empirical Evidence from China’s Capital Market

Keping¹

2021

JFCR

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Using data from China's capital market, the intrinsic relationship between political connections and crash risk is tested. Empirical research find that political connections and crash risk are significantly negatively correlated after controlling for the influence of relevant factors; a company with higher proportion of major shareholders, and in company with lower degree of marketization, the negative correlation between political connections and crash risk is more significant; political links of non-foreign funded enterprises is more effective than political connections of foreign funded enterprises in reducing crash risk. The research results indicate that we should exert the positive influence of political connections, reduce the shareholding ratio of major shareholders, accelerate the process of marketization, strengthen corporate governance of non-foreign funded enterprise, and can reduce stock price crash risk, therefore, it will help steady operation of China's capital market.

show abstract

Section: Itical Link and Crash Riskmentioning

confidence: 99%

“…Based on existing research [35][36], this paper recalculate W it , and calculate crash risk based on model (2) and model (3).…”

Section: Different Measure Of Crash Riskmentioning

confidence: 99%

See 1 more Smart Citation

Do Political Connections Affect Stock Price Crash Risk-Based on Empirical Evidence from China’s Capital Market

Keping¹

2021

JFCR

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“…In this field, most research focus on managers’ hoarding negative news until a certain threshold triggers the stock price crash due to the concentrated outbreak of negative news. In accordance with agency theory, the hoarding of bad news is driven by agency problems and leads to information asymmetry and crash risk ( Jin and Myers, 2006 ; Xu et al, 2013 ; Kong et al, 2021 ). Investors remember overconfident managers and companies with low social responsibility, so that they have foresight in their daily investment decision-making operations ( Lee et al, 2019 ; Moradi et al, 2021 ).Some changes will suppress the stock price crash, including the emergence of new media increasing the difficulty for insiders to hide bad news ( Ding et al, 2018 ; Sun et al, 2018 ; Zhang et al, 2018 ; Xie et al, 2016 ).…”

Section: Introductionmentioning

confidence: 98%

Information disclosure of COVID-19 specific medicine and stock price crash risk in China

Duan

Lin

2022

Finance Research Letters

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“…With regard to the association between asset returns or volatility and causal reasoning, Kong et al . (2020) find that causal language is positively and significantly associated with future stock price crash risk. In this paper, we find that causal reasoning language is likely to make whitepaper disclosures more persuasive, and strengthen the association between net positive tone and ICO’s first trading day return.…”

Section: Introductionmentioning

confidence: 99%

Positive tone and initial coin offering

Zhang

Aerts

Zhang

et al. 2021

Accounting & Finance

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An initial coin offering (ICO) has become a popular venue for crowdfunding at an early stage in a blockchain project. In the ICO process, a whitepaper may serve as an effective marketing tool to influence investor perception and investor trading behaviour. In this paper, we investigate whether management sentiment, as captured by the disclosure tone of the ICO whitepaper, is seen as a credible signal and capable of affecting price behaviour of the ICO on its first trading day. We document a positive association between management’s net positive tone in the whitepaper and ICO first‐day return, indicating that management sentiment has a significant impact on investor behaviour. Our findings show, however, that such association is contingent on the presence of causal argument, suggesting that disclosure tone needs a significant extent of causal reasoning support to back up its credibility and make it persuasive. These findings provide incremental evidence on the relationship between management tone and relative asset returns during an ICO process in the cryptocurrency markets. While management may benefit from soft information disclosure in the whitepaper, investors and regulators should be aware of self‐serving incentives in whitepaper disclosures.

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Explain or conceal? Causal language intensity in annual report and stock price crash risk

Cited by 52 publications

References 41 publications

Do Political Connections Affect Stock Price Crash Risk-Based on Empirical Evidence from China’s Capital Market

Do Political Connections Affect Stock Price Crash Risk-Based on Empirical Evidence from China’s Capital Market

Information disclosure of COVID-19 specific medicine and stock price crash risk in China

Positive tone and initial coin offering

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