Abstract
This paper examines the asset pricing implication of stakeholder orientation. We exploit the staggered adoption of constituency statues across U.S. states as an exogenous source of variation in stakeholder orientation. The enactment of constituency statues leads to a significant decrease in firm's stock price crash risk relative to comparable firms in non-affected states. Moreover, the negative impact on firm's crash risk only shows up after the stakeholder orientation recognition and thus is unlikely driven by unobservable economic conditions. Overall, the findings are consistent with the view that stakeholder orientation is value-enhancing and helps to curb bad-news-hoarding activities.
Original language | English |
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Article number | 101370 |
Journal | Finance Research Letters |
Volume | 37 |
DOIs | |
Publication status | Published - Nov 2020 |
Scopus Subject Areas
- Finance
User-Defined Keywords
- Crash risk
- Disclosure
- Stakeholder orientation