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Debt and stock price crash risk in weak information environment

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  • Wang, Meng
  • Han, Miao
  • Huang, Wei

Abstract

We document that stock price crash risk is negatively associated with the level of debt financing by listed Chinese firms. This finding indicates that creditor monitoring reduces bad news hoarding in China's weak information environment.

Suggested Citation

  • Wang, Meng & Han, Miao & Huang, Wei, 2020. "Debt and stock price crash risk in weak information environment," Finance Research Letters, Elsevier, vol. 33(C).
    • Handle: RePEc:eee:finlet:v:33:y:2020:i:c:s1544612319300376
    DOI: 10.1016/j.frl.2019.05.004
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    Cited by:

    1. Huang, Wei & Luo, Yan & Zhang, Chenyang, 2022. "Accounting-based downside risk and stock price crash risk: Evidence from China," Finance Research Letters, Elsevier, vol. 45(C).
    2. Jiang, Kangqi & Du, Xinyi & Chen, Zhongfei, 2022. "Firms' digitalization and stock price crash risk," International Review of Financial Analysis, Elsevier, vol. 82(C).
    3. Wang, Xiaoxiao & Liu, Haiming, 2022. "The impact of rollover restriction on stock price crash risk," Pacific-Basin Finance Journal, Elsevier, vol. 74(C).
    4. Richardson, Grant & Obaydin, Ivan & Liu, Chelsea, 2022. "The effect of accounting fraud on future stock price crash risk," Economic Modelling, Elsevier, vol. 117(C).
    5. Cui, Xin & Sensoy, Ahmet & Nguyen, Duc Khuong & Yao, Shouyu & Wu, Yiyao, 2022. "Positive information shocks, investor behavior and stock price crash risk," Journal of Economic Behavior & Organization, Elsevier, vol. 197(C), pages 493-518.
    6. Hendijani Zadeh, Mohammad, 2023. "Regional social capital and stock price crash risk: Evidence from the US," Finance Research Letters, Elsevier, vol. 51(C).

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    More about this item

    Keywords

    Stock crash risk; Debt; China;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G3 - Financial Economics - - Corporate Finance and Governance

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