Internal coalition and stock price crash risk

Xu, Lin; Rao, Yulei; Cheng, Yingmei; Wang, Jianxin

doi:10.1016/j.jcorpfin.2020.101640

Cited by 25 publications

(10 citation statements)

References 42 publications

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“…Note thatFaleye, Kovacs and Venkateswaran (2014) examine a different type of CEO connections and capture the personal social network connections of CEOs observed in the BoardEx database. However, it is reasonable to argue that the improved information sharing through CEO connections could also take place in our context based on the prior findings that connected TMT forms a private alliance to manipulate corporate information(Khanna, Kim and Lu, 2015;Cheng, Lee and Shevlin, 2016;Xu et al 2020). …”

mentioning

confidence: 91%

“…Some empirical studies build on Landier et al (2009) and Acharya, Myers and Rajan (2011), assuming that the CEO-appointed subordinate executives are less independent-minded and weaken the governance role of non-CEO executive team. In support, they find that closely connected TMT is associated with lower firm performance (Landier et al, 2013), more frequent incidence of fraudulent activities by managers (Khanna, Kim and Lu, 2015), and increased stock price crash risk (Xu et al, 2020). Other evidence pinpoints the benefit of TMT connectedness resulting from the improved coordination and information sharing among interconnected top managers.…”

Section: Introductionmentioning

confidence: 97%

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Management connectedness and corporate investment

Agha

Pham

2021

Journal of Banking & Finance

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confidence: 91%

Section: Introductionmentioning

confidence: 97%

Management connectedness and corporate investment

Agha

Pham

2021

Journal of Banking & Finance

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“…Xu, Xuan, and Zheng (2021) demonstrated that internet searching facilitates investors' information processing, thus reducing firms' SPCR by using the event of Google unexpectedly withdrew its searching business from China. In addition, there are also some literatures explored the influencing factors of SPCR from the perspectives of excess perk consumption (Xu, Li, Yuan, & Chan, 2014), excessive relationship expenditure, board social capital (Jebran, Chen, & Zhang, 2022), local gambling preference (Ji, Quan, Yin, & Yuan, 2021), tournament incentive (Sun, Habib, & Huang, 2019), ultimate ownership (Liang, Li, Gao, & Mathur, 2020), internal coalition (Xu, Rao, Cheng, & Wang, 2020) and information interaction among large shareholders (Li, Wang, Zhou, & Zhang, 2021), and so on.…”

Section: Related Research On Spcrmentioning

confidence: 99%

Common ownership and stock price crash risk: Evidence from China

Jiang

Shi

2022

Australian Economic Papers

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This study examines whether common ownership affects stock price crash risk (SPCR). Using 3,159 companies listed in China between 2006 and 2019, this paper finds that companies with common ownership are associated with lower SPCR. This finding can be explained by the monitoring effect of common ownership which holds that common ownership can curb the hoarding of bad news by managers and thereby reduces SPCR. We further show that the effect is more evident when common owners hold a relatively larger number of sameindustry firms, when common owners hold more shares, and for state-owned-enterprises. Moreover, this paper also demonstrates how common ownership facilitates effective monitoring and finds that common ownership reduces earnings management and increases accounting conservatism in firms. Our evidence suggests that common ownership serves as an effective form of monitoring by constraining managers' opportunistic behaviour, thereby reducing SPCR. K E Y W O R D Saccounting conservatism, common ownership, earnings management, monitoring effect, stock price crash risk All authors were contributed equally.

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“…Some studies found corporate governance factors which give rise to crash risk. For instance, powerful executive officers (CEOs) (Al Mamun et al, 2020), younger CEOs (Andreou et al, 2017), the appointment-based internal coalition (Xu et al, 2020), business entertainment expenses (Hu et al, 2020a(Hu et al, , 2020b, transient institutional ownership, CEO stock option incentives and the proportion of directors that hold equity (Andreou et al, 2016) are related positively to future crash risk. In contrast, some studies found corporate governance factors which help to mitigate crash risk.…”

Section: Introductionmentioning

confidence: 99%

The increasing number of subsidiaries and stock price crash risk: evidence from the Chinese stock market

Lei

Ren

2022

PAR

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Purpose With the development of the economy, an increasing number of listed companies form subsidiaries in China. Though the increase in the number of subsidiaries affects the hierarchical structure and risk of conglomerates, few studies relate the hierarchical relationship between the parent company and its subsidiaries to its capital market performance at the conglomerate level. Therefore, this study aims to investigate the relationship between the number of subsidiaries and crash risk. Design/methodology/approach Using a sample of all the A-share companies in the Shanghai and Shenzhen stock markets from 2007 to 2015, this study conducts multivariate regression analyses between the number of subsidiaries and the stock price crash risk. Findings This study finds an inversed U relationship between the number of subsidiaries and the stock price crash risk, and the above inversed U relationship is steeper in conglomerates with stronger managerial power and less finance distress. Originality/value This research has an incremental contribution to the agency problem and governance effect of the parent–subsidiary system in conglomerates. To the best of the authors’ knowledge, this is the first study to show a significant quadratic relationship between the future crash risk and the number of subsidiaries. This paper provides new evidence that the number of subsidiaries has an incremental ability to predict future firm-specific crash risk above other predictors identified by previous research.

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Internal coalition and stock price crash risk

Cited by 25 publications

References 42 publications

Management connectedness and corporate investment

Management connectedness and corporate investment

Common ownership and stock price crash risk: Evidence from China

The increasing number of subsidiaries and stock price crash risk: evidence from the Chinese stock market

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