The Effect of Management Disclosure and Analysis on the Stock Crash Risk: Evidence from Korea

Lee, A‐Young; Chae, Soo-Joon

doi:10.13106/jafeb.2018.vol5.no4.67

Cited by 13 publications

(6 citation statements)

References 7 publications

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“…Research has shown that corporate information disclosure plays an important role in minimizing information asymmetry and reducing agency problems (Cormier, Ledoux, & Magnan, 2011). In particular, the publication of information, both mandatory and voluntary for the capital market, will help companies to reduce capital costs, gain investor confidence, and increase the value of the stock market (Mahadeo et al, 2011), (Baimukhamedova, Baimukhamedova, & Luchaninova, 2017;Lee & Chae, 2018). Hardiningsih, Januarti, Yuyetta, Srimindarti, and Udin (2020), Perrini, Russo, Tencati, and Vurro (2011) conclude that revealing more information and thus reducing asymmetric information can reduce the cost of the company capital.…”

Section: Agency Theorymentioning

confidence: 99%

The Effect of Corporate Governance Disclosure on Banking Performance: Empirical Evidence from Iran, Saudi Arabia and Malaysia

Khanifah¹,

Hardiningsih²,

DARMARYANTIKO³

et al. 2020

JAFEB

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A series of corporate failures and financial crises have raised attention to organizational governance issues, especially for financial institutions. In the banking system, corporate governance further plays a unique role because of the uniqueness of the banking organizations. Therefore, this study aims to examine the effect of corporate governance disclosure on bank performance by building a corporate governance disclosure index (CGDI) for 10 Islamic banks operating in Iran, Saudi Arabia and Malaysia. The data used in this study are secondary data taken from annual reports and sourced from the official websites of each banks include Iran Exchange, Stock Market Quotes and Financial News, and Bursa Malaysia. This study uses content analysis of the annual bank report within five years (2014)(2015)(2016)(2017)(2018). The results show that Islamic banks comply with 72.4% of the attributes discussed in the CGDI. The most frequently reported and disclosed elements are board structure and audit committee. The regression results provide evidence that Islamic banks with a higher level of corporate governance disclosure reported high operating performance measured by ROA. In contrast to the expectation, the financial performance of ROE and Tobins'q are not significantly related to the disclosure of sharia bank governance.

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Section: Agency Theorymentioning

confidence: 99%

The Effect of Corporate Governance Disclosure on Banking Performance: Empirical Evidence from Iran, Saudi Arabia and Malaysia

Khanifah¹,

Hardiningsih²,

DARMARYANTIKO³

et al. 2020

JAFEB

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“…The bulk of recent empirical studies on crash risk follows the agency theoretical concept of Jin and Myers (2006) who show that information asymmetry between managers and investors contributes to crash risk (e.g., Hutton et al, 2009;Lee & Chae, 2018;Chae, Nakano, & Fujitani, 2020). Information asymmetry allows managers to delay bad news over time to protect employment and maximize compensation (Kothari, Shu, & Wysocki, 2009).…”

Section: Stock Price Crash Riskmentioning

confidence: 99%

Does Hedging with Derivatives Affect Future Crash Risk?

Park¹,

Park²

2020

JAFEB

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The study aims to investigate the relationship between hedging with derivatives and subsequent firm-level stock price crash risk. Our sample consists of KOSPI-and KOSDAQ-listed companies from 2004 to 2014. The total firm-year observation is 4,886. We find that hedging with derivatives is related to greater possibilities of crash risk. The results suggest that the complexity of economic and financial reporting for derivatives may aggravate the company's information opacity, ultimately increasing the crash risk. We contribute to the growing body of literature on hedging with derivatives. Academics and practitioners have debated on whether or not hedging enhances transparency or rather makes the information environment more opaque. Theoretical research on the role of corporate hedging on information environment shows that hedging enhances earnings informativeness. Meanwhile, pieces of anecdotal and empirical evidence show that the economic and financial reporting complexity of derivatives can harm information transparency. Our results shed light on the question of whether and how hedging with derivatives affects information environment by examining the relationship between hedging with derivatives and crash risk. Furthermore, our findings provide useful insights for policymakers and practitioners. Specifically, our results raise a need for a more transparent disclosure on corporate hedging activities with derivatives.

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“…Lee and Chae [10] use logistic regression to test whether MD&A influences crash risk using listed companies in the Korean Stock Exchange (KSE) stock market, which indicates that a firm's high-quality MD&A implies the management's commitment to communicating with the market, not allowing the managers to have incentives to hoard negative news. Thus, the high-quality MD&A is likely to reduce the stock price crash risk.…”

Section: The Effect Of Quality Of Management Discussion and Analysis (Mdanda) Disclosure On Stock Price Crash Riskmentioning

confidence: 99%

Influencing Factors of Stock Price Crash Risk

Chen¹,

Liu²,

Sun³

et al. 2021

Proceedings of the 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021)

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The research on preventing the stock price crash risk is of great significance. Previous literature has examined many influencing factors of crash risk. This paper surveys the burgeoning literature on stock price crash risk. It makes a detailed and comprehensive review of the relevant literature from four parts: (i) the effects of behavioral characteristics of corporate management and shareholders on the stock price crash risk; (ii) the impact of internal corporate decisions on the stock price crash risk; (iii) the influence of external regulatory forces on the stock price crash risk; (iv) the impact of national systems, social habits, as well as the economic policy uncertainty on the stock price crash risk. This literature review is a supplement to the prior literature and is of great significance.

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The Effect of Management Disclosure and Analysis on the Stock Crash Risk: Evidence from Korea

Cited by 13 publications

References 7 publications

The Effect of Corporate Governance Disclosure on Banking Performance: Empirical Evidence from Iran, Saudi Arabia and Malaysia

The Effect of Corporate Governance Disclosure on Banking Performance: Empirical Evidence from Iran, Saudi Arabia and Malaysia

Does Hedging with Derivatives Affect Future Crash Risk?

Influencing Factors of Stock Price Crash Risk

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