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 journalArticlepeer-review

1 Citation (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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