Research on the influence of equity pledge on stock price crash risk: based on financial shock of 2015 stock market crisis

Xu, Rong; Chang, Jialu; Li, Conggang; Wang, Wenlan

doi:10.1080/20954816.2019.1667599

Cited by 21 publications

(21 citation statements)

References 22 publications

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“…Dou et al [ 32 ] also pointed out that margin calls triggered by severe price falls would exacerbate the crash risk of pledging firms. Xu et al [ 34 ] similarly concluded that share pledging influences the stock price crash risk by producing longer suspension and greater price fluctuation. Pledged firms exhibit much higher stock price crash risk compared with non-pledged counterparts when it is the controlling shareholder that pledges the shares [ 35 ].…”

Section: Literature Review and Research Hypothesesmentioning

confidence: 99%

Linkages between share pledging, stock price risk and profitability: Evidence from the P.R. China

Zhang

Ortiz

2021

PLoS ONE

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Share pledging has become popular as a method of loan collateral among Chinese shareholders. Our research used a sample of Chinese listed firms between 2008–2018 and produced two main findings. Firstly, we found a negative association between stock price risk and firm profitability. Our second finding was that the interaction effect of share pledging and stock price risk is greater on firm profitability than the effect of stock price risk itself. We examined the role of share pledging by modeling pooled OLS and fixed effects using share pledging behavior, controlling shareholders’ share pledging and the share pledging ratio to reinforce the robustness of our results. Furthermore, we investigated the Davis Double Play effect of share pledging to analyze how share pledging affects stock price risk. We found that higher EPS and investor expectations cannot mitigate the positive impact of share pledging on stock price risk. That is, the reduction of EPS and the deterioration of investor expectations caused by share pledging risk will not further aggravate the stock price risk, as shareholders may have taken some managerial actions to affect the transmission mechanism.

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Section: Literature Review and Research Hypothesesmentioning

confidence: 99%

Linkages between share pledging, stock price risk and profitability: Evidence from the P.R. China

Zhang

Ortiz

2021

PLoS ONE

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“…La Porta et al (2000) find that administrative regulation is an effective substitute for inefficient judicial enforcement in emerging markets with a weak judicial system. More emphasis should be put on the importance of public enforcement than on private enforcement of securities laws (La Porta et al , 2006), and public enforcement can better explain the development of financial markets worldwide than can private enforcement (Jackson and Roe, 2009; Xu et al, 2019). Shleifer (2012) shows that the effectiveness of administrative regulations is negatively correlated with that of legal proceedings in investor protection and corporate governance.…”

Section: Literature Review and Research Hypothesesmentioning

confidence: 99%

Does legal protection affect firm value? Evidence from China’s stock market

Zhang

et al. 2019

Accounting & Finance

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We examine the question of whether firms derive value in areas with higher legal protection by studying how the difference among regional legal protection levels affects capital market reactions to firms receiving administrative penalty in China. The results show that the level of legal protection has a positive effect on the market reaction to administrative penalty announcements, and the effect is attenuated by non‐state ownership. Furthermore, we find evidence of higher efficiency of law enforcement in regions with higher level of legal protection.

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“…At the same time, in view of the randomness and periodicity of the stock market fluctuation and the speculative nature of the investors in the stock market, the stock price is vulnerable to fluctuation due to various uncertain factors [4][5][6]. However, once the stock price fluctuates abnormally, the stock price fluctuation risk may be induced [7,8]. At the same time, under the influence of sentiment correlation and policy linkage, the stock price fluctuation risk is easy to spread in a wide range, which will cause serious adverse impact on the stability of the stock market and the whole financial system.…”

Section: Introductionmentioning

confidence: 99%

Media Sentiment, Government Supervision Strategy, and Stock Price Fluctuation Risk

Ju-fang

2021

Discrete Dynamics in Nature and Society

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From the cross perspective of communication science and administration management, based on complex network theory, this paper constructs a model of stock price fluctuation risk contagion, which comprehensively considers media sentiment and government supervision strategy, and deeply analyzes the contagion mechanism of stock price fluctuation risk under the interaction of media sentiment and government supervision strategy. The main conclusions are as follows: The stock association network established by random way is more likely to cause contagion of stock price fluctuation risk. Media sentiment tendency, media sentiment intensity, and media attention persistence have positive “U” relationship, inverted “U” relationship, and positive correlation with contagion intensity of stock price fluctuation risk, respectively. There is a negative correlation between the strength, persistence, and timeliness of government supervision and the contagion intensity of stock price fluctuation risk. There is a positive correlation between market noise and contagion intensity of stock price fluctuation risk, and market noise has a restraining effect on media sentiment and government supervision strategy. In addition, the stock price fluctuation risk is inherent risk in the stock market, which cannot be eliminated by adjusting media sentiment and government supervision strategy, but its contagion intensity can be effectively controlled.

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Research on the influence of equity pledge on stock price crash risk: based on financial shock of 2015 stock market crisis

Cited by 21 publications

References 22 publications

Linkages between share pledging, stock price risk and profitability: Evidence from the P.R. China

Linkages between share pledging, stock price risk and profitability: Evidence from the P.R. China

Does legal protection affect firm value? Evidence from China’s stock market

Media Sentiment, Government Supervision Strategy, and Stock Price Fluctuation Risk

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