Managerial Ownership and Stock Price Volatility: The Moderating Role of Corporate Transparency in China

Zhong, Qi

doi:10.1155/2022/4634782

Cited by 4 publications

(1 citation statement)

References 59 publications

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“…Hong, Lim, and Stein (2000) contend that in the absence of strong investor protection, executives are likely to withhold bad information to materialize a private gain. However, when the amount and time of information hoarding exceed the market tolerance, an unexpected release of information occurs, leading to a stock price crash (Zhong, 2022;Hutton, Marcus, & Tehranian, 2009). Hu et al (2022) analyzed data from 40 countries and documented an inverse U-shaped association between insider ownership and stock price crash risk.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Insider ownership and default risk: What does the data reveal about Japanese firms?

Haque,

Kabir,

Abedin

et al. 2024

CAFR

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PurposeThe ownership structure in Japanese firms has experienced a significant change recently, fueled primarily by regulatory changes. This has important repercussions on corporate performance and risk. This paper examines the impact of insider ownership on the default risk of Japanese firms.Design/methodology/approachWe collected data from the Nikkei Corporate Governance Evaluation System (CGES) database for the period 2004–2019. Our final dataset yields 36,116 firm-year observations. We apply a firm fixed effect model for baseline regression. Endogeneity was checked by applying propensity score matching (PSM) and two-stage least squares (2SLS) techniques. Furthermore, the robustness of baseline regression results was checked using alternative estimation techniques.FindingsResults show a significant positive influence of insider ownership on default risk. Furthermore, ROA volatility and stock price volatility appear to be the major channels through which insider ownership affects a firm’s default risk. We further document that external monitoring mechanisms, including traditional main bank ties, institutional ownership and analyst coverage, are the key risk-mitigating factors.Research limitations/implicationsOur research deals with Japanese firms only. Future research may attempt to analyze the cases of emerging economies. Furthermore, future research might examine the ownership-default risk relationship for financial institutions to see if this relationship differs between financial and nonfinancial firms.Practical implicationsInsider ownership enhances the probability of default. Hence, policymakers may consider instituting a ceiling for insider ownership in Japanese firms. Moreover, we highlight various risk-mediating channels that would help policymakers adopt guidelines for mitigating corporate risk.Originality/valueOur study is the first to investigate the effect of insider ownership on default risk in Japanese settings. Prior studies identified various determinants that affect firms’ default risk. Our study contributes to this stream of literature by examining the impact of insider ownership on default risk and extending the limited literature related to insider ownership.

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Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Insider ownership and default risk: What does the data reveal about Japanese firms?

Haque,

Kabir,

Abedin

et al. 2024

CAFR

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Corporate COVID-19 disclosure and stock price volatility: evidence from Egypt

Saleh,

2024

JFRA

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Purpose This paper aims to examine the relationship between corporate COVID-19 disclosure (COVID_DISC) and stock price volatility (SPV) in Egypt. Design/methodology/approach The authors used the manual content analysis method to measure corporate COVID-19 disclosure in the narrative sections of annual reports. The authors use ordinary least squares (OLS) regression to examine the impact of corporate COVID-19 disclosure on stock price volatility using unique data from Egyptian-listed firms during COVID-19 pandemic over the period of 2020 to 2022. Propensity score matching method was adopted to mitigate the potential endogeneity issue. Findings This study reveals that corporate COVID-19 disclosure has a significant negative impact on stock price volatility, suggesting COVID-19 disclosure reduces stock price volatility. In addition, the results confirm that COVID-19 disclosure offers value relevant information to investors, which is consistent with the Egyptian Financial Supervisory Authority’s (EFSA) motivation in calling for more information on COVID-19 pandemic. Practical implications The findings of this study can help corporate managers and EFSA in enhancing corporate disclosure and transparency during future financial crises. Moreover, the findings offer valuable insights to investors, helping them gain a better understanding of the business environment during COVID-19 crisis. Originality/value To the best of the authors’ knowledge, this is the first Egyptian empirical evidence that examines the relationship between corporate COVID-19 disclosure and stock price volatility.

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Does female representation on corporate boards boost the strengthening of internal control in socially responsible firms?

Pasko

Yang

Ткаченко

et al. 2022

Investment Management and Financial Innovations

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This study examines the relationship between corporate social responsibility and the effectiveness of internal control, while simultaneously examining board gender diversity to check whether female directors contribute to corporate transparency or not. The sample of the study comprises 15,231 firm-year observations of companies listed on the Shanghai and Shenzhen stock exchanges from 2013 to 2018. The raw data for variable calculation come from authoritative and reputable sources, such as China Stock Market and Accounting Research (CSMAR), DIB Internal Control database, and RKS CSR score. The empirical study shows that socially high-performing firms possess a more effective internal control mechanism. However, the paper failed to find a positive association of gender diversity on the board with internal control effectiveness, and failed to attest reinforcing effect of female directors on internal control in socially responsible firms. This study suggests that in China’s institutional environment, female directors are unlikely to contribute to increased corporate transparency. This study is useful for both regulators and company management to establish a master plan and tactics for board composition to improve corporate transparency, taking into account the effect of the investigated phenomena within the jurisdiction under study. AcknowledgmentThis paper is co-funded by the European Union through the European Education and Culture Executive Agency (EACEA) within the project “EMBRACING EU CORPORATE SOCIAL RESPONSIBILITY: CHALLENGES AND OPPORTUNITIES OF BUSINESS-SOCIETY BONDS TRANSFORMATION IN UKRAINE” 101094100 — EECORE — ERASMUS-JMO-2022-HEI-TCH-RSCH-UA-IBA / ERASMUS-JMO-2022-HEI-TCHRSCH https://eecore.snau.edu.ua/

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Managerial Ownership and Stock Price Volatility: The Moderating Role of Corporate Transparency in China

Cited by 4 publications

References 59 publications

Insider ownership and default risk: What does the data reveal about Japanese firms?

Insider ownership and default risk: What does the data reveal about Japanese firms?

Corporate COVID-19 disclosure and stock price volatility: evidence from Egypt

Does female representation on corporate boards boost the strengthening of internal control in socially responsible firms?

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