IDEAS home Printed from https://ideas.repec.org/a/cai/finpug/fina_pr_014.html
   My bibliography  Save this article

Stock Price Crash Risk, Managerial Ownership, and Cost of Debt

Author

Listed:
  • Florence Depoers
  • Assil Guizani
  • Faten Lakhal

Abstract

The purpose of this paper is to investigate the effect of stock price crash risk on the cost of debt for French listed companies. We use a sample of 221 companies from 2008 to 2017 and find that stock price crashes increase the cost of debt, suggesting that creditors consider a firm-level stock price crash to be an important risk factor when issuing loans. This positive effect is more pronounced in firms with high systematic risk and information asymmetry issues. We also show that the positive effect of stock price crash risk on the cost of debt is less prevalent when the manager or the founding family is the first large shareholder of the company. These findings support the hypothesis of alignment of interests between managers and creditors and are in line with the perspective of the social networks, owner-managers and families have with their banks.

Suggested Citation

  • Florence Depoers & Assil Guizani & Faten Lakhal, 2023. "Stock Price Crash Risk, Managerial Ownership, and Cost of Debt," Finance, Presses universitaires de Grenoble, vol. 44(2), pages 37-68.
    • Handle: RePEc:cai:finpug:fina_pr_014
    as

    Download full text from publisher

    File URL: http://www.cairn.info/load_pdf.php?ID_ARTICLE=FINA_PR_014
    Download Restriction: restricted
    File URL: http://www.cairn.info/revue-finance-2023-2-page-37.htm
    Download Restriction: restricted
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cai:finpug:fina_pr_014. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jean-Baptiste de Vathaire (email available below). General contact details of provider: https://www.cairn.info/revue-finance.htm .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.