{"title":"Common ownership and stock price crash risk: Evidence from China","authors":"Ping Jiang, Yunbiao Ma, Beibei Shi","doi":"10.1111/1467-8454.12259","DOIUrl":null,"url":null,"abstract":"<p>This study examines whether common ownership affects stock price crash risk (SPCR). Using 3,159 companies listed in China between 2006 and 2019, this paper finds that companies with common ownership are associated with lower SPCR. This finding can be explained by the monitoring effect of common ownership which holds that common ownership can curb the hoarding of bad news by managers and thereby reduces SPCR. We further show that the effect is more evident when common owners hold a relatively larger number of same-industry firms, when common owners hold more shares, and for state-owned-enterprises. Moreover, this paper also demonstrates how common ownership facilitates effective monitoring and finds that common ownership reduces earnings management and increases accounting conservatism in firms. Our evidence suggests that common ownership serves as an effective form of monitoring by constraining managers' opportunistic behaviour, thereby reducing SPCR.</p>","PeriodicalId":1,"journal":{"name":"Accounts of Chemical Research","volume":null,"pages":null},"PeriodicalIF":16.4000,"publicationDate":"2022-03-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"3","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Accounts of Chemical Research","FirstCategoryId":"96","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1111/1467-8454.12259","RegionNum":1,"RegionCategory":"化学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"CHEMISTRY, MULTIDISCIPLINARY","Score":null,"Total":0}
引用次数: 3
Abstract
This study examines whether common ownership affects stock price crash risk (SPCR). Using 3,159 companies listed in China between 2006 and 2019, this paper finds that companies with common ownership are associated with lower SPCR. This finding can be explained by the monitoring effect of common ownership which holds that common ownership can curb the hoarding of bad news by managers and thereby reduces SPCR. We further show that the effect is more evident when common owners hold a relatively larger number of same-industry firms, when common owners hold more shares, and for state-owned-enterprises. Moreover, this paper also demonstrates how common ownership facilitates effective monitoring and finds that common ownership reduces earnings management and increases accounting conservatism in firms. Our evidence suggests that common ownership serves as an effective form of monitoring by constraining managers' opportunistic behaviour, thereby reducing SPCR.
期刊介绍：
Accounts of Chemical Research presents short, concise and critical articles offering easy-to-read overviews of basic research and applications in all areas of chemistry and biochemistry. These short reviews focus on research from the author’s own laboratory and are designed to teach the reader about a research project. In addition, Accounts of Chemical Research publishes commentaries that give an informed opinion on a current research problem. Special Issues online are devoted to a single topic of unusual activity and significance.
Accounts of Chemical Research replaces the traditional article abstract with an article "Conspectus." These entries synopsize the research affording the reader a closer look at the content and significance of an article. Through this provision of a more detailed description of the article contents, the Conspectus enhances the article's discoverability by search engines and the exposure for the research.
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