Product market competition and stock price crash risk: Exploring the role of managerial ownership

Benkraiem, Ramzi; Galariotis, Emilios C.; Guizani, Assil; Lakhal, Faten

doi:10.1016/j.ribaf.2022.101786

Cited by 6 publications

(4 citation statements)

References 51 publications

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“…Market competition. Following existing literature, this study quantifies market competition intensity through the absolute value of the Herfindahl Index’s logarithm [ 60 ].…”

Section: Methodsmentioning

confidence: 99%

How to achieve high-quality development of SRDI enterprises—A study of the TOE framework-based configuration

Zhang,

Feng,

Wang

et al. 2024

PLoS ONE

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The high-quality development of SRDI enterprises is crucial for China to overcome critical technological bottlenecks and thereby achieve technological independence and strength. However, the factors driving the high-quality development of SRDI enterprises are not isolated elements, but rather a complex system of interconnected antecedents. This study employs the TOE framework and fuzzy set Qualitative Comparative Analysis (fsQCA) with 141 Chinese SRDI “little giant” listed companies as samples to explore how various factors contribute to their high-quality development. The findings indicate: (1) No single factor is necessary for SRDI enterprises’ high-quality development. (2) It is the synergy of multiple factors, in various combinations, that drives their high-quality development. (3) Technological innovation plays a key role in these pathways; SRDI enterprises should leverage their resources and capabilities for a synergistic technology-organization-environment match, selecting the most suitable development path. The results of this study not only enrich our understanding of the factors influencing SRDI enterprises’ high-quality development but also offer insights for both the enterprises and government policy-making.

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“…Market competition. Following existing literature, this study quantifies market competition intensity through the absolute value of the Herfindahl Index’s logarithm [ 60 ].…”

Section: Methodsmentioning

confidence: 99%

How to achieve high-quality development of SRDI enterprises—A study of the TOE framework-based configuration

Zhang,

Feng,

Wang

et al. 2024

PLoS ONE

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“…Granting directors and other members of management a designated number of shares presents an efficacious remedy for the agency problem ( Shan et al, 2019 ). Managerial shareholding confers upon management a residual claim, facilitating the alignment of residual control rights and claims within the enterprise, engendering interest convergence effects, fostering close integration of managerial interests with long-term enterprise development, and effectively mitigating managers’ opportunistic tendencies ( Jensen and Meckling, 1976 ; Chen, 2005 ; Benkraiem et al, 2022 ). Managerial ownership can transform external supervision into a self-incentive and constraint, thereby serving as an essential alternative mechanism in cases where the existing supervision mechanism fails.…”

Section: Theoretical Analysis and Hypothesis Developmentmentioning

confidence: 99%

A study of the impact of staggered boards on corporate financialization: from the perspective of board governance

Cao,

Zhang

2024

Front. Psychol.

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IntroductionThe objective of this study is to assess the influence of staggered boards on corporate financialization and the role that incentive and supervision mechanisms play in this process.MethodsWe employ a total of 20,647 panel data samples of Chinese A-share listed companies over the period 2011-2020 to empirically test the impact of staggered boards on corporate financialization in the Chinese context.ResultsThe results indicate that implementing staggered boards significantly increases levels of corporate financialization. On the one hand, the implementation of a staggered board structure can exacerbate the speculative mindset and profit-driven behavior among board members, leading management to prioritize financial investments for personal gain. On the other hand, a staggered board system may also amplify managerial laziness, potentially incentivizing them to rely heavily on financial investments in order to swiftly achieve performance targets with minimal effort. Furthermore, both managerial ownership and audit supervision are found to be critical factors in mitigating this positive impact and preventing excessive financial investment behavior.DiscussionThis paper offers guidance on comprehending the applicability of staggered board provisions and mitigating financial risks in enterprises.

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“…Interestingly, research suggests foreign institutional investors from countries with high tax morality and corporate governance quality are negatively associated with corporate tax avoidance (Hasan et al, 2019). We might argue that strong institutional frameworks can constrain corporate tax avoidance by mitigating agency problems, limiting expropriation, and imposing penalties for opportunistic behavior (Benkraiem et al, 2024;Hu et al, 2023). In addition, quality governance likely improves corruption control, which is a key driver of tax evasion (Nimer et al, 2022;Yamen et al, 2018).…”

Section: Policy Uncertainty National Governance Quality and Tax Avoid...mentioning

confidence: 99%

Corporate tax avoidance under economic policy uncertainty. Does the quality of institutional governance matter?

Magerakis

2024

Preprint

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This study examines the effect of economic policy uncertainty (EPU) on corporate tax avoidance using a comprehensive sample of 236,455 private firm-year observations from Greece for the period 2015-2021. Employing effective tax rate (ETR) as a proxy for tax avoidance, we find a positive and significant relationship between EPU and ETR. This finding suggests that, as economic policy uncertainty increases, firms engage in less tax avoidance, resulting in higher effective tax rates. This result is robust to alternative model specifications, endogeneity tests, weighted least squares, and subsample analyses. Additionally, the positive relationship between economic policy uncertainty (EPU) and effective tax rates is stronger when the governance quality is high. Firms facing higher EPU adopt conservative tax strategies to mitigate regulatory risks, which results in higher effective tax rates. The effect of EPU on ETR persists for up to five years, implying that firms continue their long-term tax planning in response to policy uncertainty. Furthermore, we reveal that the impact of economic policy uncertainty on firm performance is more prominent for firms with higher effective tax rates, highlighting the potential consequences of reducing tax obligations in times of increased uncertainty. Additional tests reveal that the positive association between EPU and ETR is driven by various components of policy uncertainty, including economic, political, financial, debt, tax, monetary, and pandemic-related uncertainties. Moreover, we find that the World Pandemic Uncertainty Index is negatively associated with ETR, indicating that firms respond differently to pandemic-induced uncertainty compared to general EPU. Our research adds to the existing body of knowledge by offering fresh insights into how policy unpredictability influences corporate tax avoidance strategies within a European context marked by significant economic volatility. JEL Classification: G18; G32; H26; M40

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Product market competition and stock price crash risk: Exploring the role of managerial ownership

Cited by 6 publications

References 51 publications

How to achieve high-quality development of SRDI enterprises—A study of the TOE framework-based configuration

How to achieve high-quality development of SRDI enterprises—A study of the TOE framework-based configuration

A study of the impact of staggered boards on corporate financialization: from the perspective of board governance

Corporate tax avoidance under economic policy uncertainty. Does the quality of institutional governance matter?

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