Purpose The purpose of this paper is to empirically analyze whether and how managerial overconfidence affects stock price crash risk. Design/methodology/approach Based on a large sample of Chinese non-state-owned firms from 2000 to 2012, this study employs methods including multiple linear regression model, Heckman two-stage treatment effect procedure, firm fixed effects model and event study to clarify the causality relationship between managerial overconfidence and crash risk. Findings The authors find that firms with overconfident managers (chief executive officer or board chairs) are more likely to experience future stock price crashes than firms with non-overconfident managers. The effect of overconfidence on crash risk is more pronounced for firms with low transparency, suggesting that firm opacity facilitates overconfident managers’ bad news hoarding activities, which, in turn, increases stock price crash risk. The authors also show evidence that overconfident managers tend to disclose good news in a timely manner. Originality/value The authors add to the growing literature on stock price crash risk. Specifically, the authors find that the cognitive bias of board chair plays an important role in the bad news hoarding activities, thereby increasing the likelihood of stock price crash. This study also contributes to the literature that addresses the effects of managerial overconfidence on corporate finance issues.

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Whether maintaining a close relationship with China can benefit economic performance in the postpandemic era is a crucial concern for countries around the world. This study employs the difference‐in‐difference (DID) model and propensity score matching to estimate the impact of connecting people proposed by the Belt and Road Initiate (BRI) on the subnational economic development of the Association of Southeast Asian Nations (ASEAN) cities. The quasi‐natural experiment of DID is based on the establishment of China–ASEAN friendship cities. We capture the ASEAN subnational economic development by calibrated satellite nighttime light data. Our findings show that the establishment of a friendship‐city relationship has a positive impact on the subnational economic development of China–ASEAN cities. Further analysis indicates that bilateral trade, China's direct investment in contracted projects, and mutual visits by national leaders may be the underlying channels for boosting the economic development of China–ASEAN friendship cities. This study contributes to the literature on friendship city and provides ex‐ante implications on the BRI from the perspective of connecting people with first‐hand empirical evidence.