Insider ownership and stock price crash risk around the globe

Gang Hu; Yiye Liu; Jacqueline Wenjie Wang; Gaoguang Zhou; Xindong Zhu

doi:10.1016/j.pacfin.2022.101714

Insider ownership and stock price crash risk around the globe

Research output: Journal Publications and Reviews (RGC: 21, 22, 62) › 21_Publication in refereed journal › peer-review

Overview

2 Scopus Citations

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Author(s)

Gang Hu
Yiye Liu
Jacqueline Wenjie Wang
Gaoguang Zhou
Xindong Zhu

Related Research Unit(s)

Department of Accountancy

Detail(s)

Original language	English
Article number	101714
Journal / Publication	Pacific-Basin Finance Journal
Volume	72
Online published	29 Jan 2022
Publication status	Published - Apr 2022

Link(s)

DOI	DOI https://doi.org/10.1016/j.pacfin.2022.101714 Final Published version
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Link to Scopus	https://www.scopus.com/record/display.uri?eid=2-s2.0-85123797850&origin=recordpage
Permanent Link	https://scholars.cityu.edu.hk/en/publications/publication(6c2b7b25-08c2-485f-92f1-205e9bd8363d).html

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).