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The association between political connection and stock price crash risk: Using financial reporting quality as a moderator

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  • Fang, Tzu-Yi
  • Lin, Fengyi
  • Lin, Sheng-Wei
  • Huang, Yi-Hua

Abstract

•This paper examines how political connections (PCs) can exacerbate the managerial hoarding of negative news and subsequently affect the risk appertaining to a stock price crash.•The present study also extends recent research on the PCs–financial reporting connection through an evaluation of said risk.•Compared with other types of risk, crash risk uniquely has a direct economic impact on investors. Thus, investors seeking to make investment decisions and manage their risks must understand the crash risk.

Suggested Citation

  • Fang, Tzu-Yi & Lin, Fengyi & Lin, Sheng-Wei & Huang, Yi-Hua, 2020. "The association between political connection and stock price crash risk: Using financial reporting quality as a moderator," Finance Research Letters, Elsevier, vol. 34(C).
    • Handle: RePEc:eee:finlet:v:34:y:2020:i:c:s1544612319302715
    DOI: 10.1016/j.frl.2019.08.015
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    References listed on IDEAS

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    Cited by:

    1. Rocca, Maurizio La & Fasano, Francesco & Cappa, Francesco & Neha, Neha, 2022. "The relationship between political connections and firm performance: An empirical analysis in Europe," Finance Research Letters, Elsevier, vol. 49(C).
    2. Tee, Chwee Ming & Lee, Mei Yee & Majid, Abdul, 2021. "Heterogeneous political connections and stock price crash risk: Evidence from Malaysia," Journal of Behavioral and Experimental Finance, Elsevier, vol. 31(C).
    3. Budi Wahyono, 2023. "Do political connections affect the market reaction to firms’ inclusion in or exclusion from the Sharia index?," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 13(4), pages 835-854, December.
    4. Wu, Keping & Fu, Yumei & Kong, Dongmin, 2022. "Does the digital transformation of enterprises affect stock price crash risk?," Finance Research Letters, Elsevier, vol. 48(C).

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