Major Shareholders’ Reduction and the Risk of Stock Price Crash

Abstract

This paper takes China Shanghai and Shenzhen A-share listed companies from 2007 to 2021 as samples to empirically test the impact of major shareholder reduction on the risk of stock price crash. This paper finds that the reduction of major shareholders promotes the risk of stock price crash of listed companies, that is, compared with listed companies without major shareholders’ reduction, the risk of stock price crash of listed companies with major shareholders’ reduction is higher, and this conclusion still holds after controlling the conservative factors. Further examination shows that the major shareholder’s manipulation of information has an impact on the risk of stock price crash, and the impact of major shareholder’s reduction on the risk of stock price crash is more obvious in China state-owned enterprises, non-high-tech enterprises, enterprises in the bull market period and enterprises in areas with low market investors.