Insider ownership and stock price crash risk around the globe

Gang Hu, Yiye Liu, Jacqueline Wenjie Wang*, Gaoguang Zhou, Xindong Zhu

*Corresponding author for this work

    Research output: Contribution to journalJournal articlepeer-review

    4 Citations (Scopus)

    Abstract

    Insider ownership is one of the most important aspects of corporate governance. In this study, we examine how insider ownership affects firms' stock market downside risk, as measured by stock price crash risk, globally. We use a large-scale international sample consisting of observations from 40 countries, and find an inverted U-shaped relationship between insider ownership and stock price crash risk. These results remain unchanged by extensive robustness tests using various settings and specifications. We also identify some factors that moderate the relationship between insider ownership and stock price crash risk: the degree of ownership dispersion at the country level, and country-level investor protection regimes / information environment / financial system structure (bank- or market-based).

    Original languageEnglish
    Article number101714
    JournalPacific Basin Finance Journal
    Volume72
    DOIs
    Publication statusPublished - Apr 2022

    Scopus Subject Areas

    • Finance
    • Economics and Econometrics

    User-Defined Keywords

    • Insider ownership
    • Investor protection
    • Stock Price crash risk

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