Vertical interlock and stock price crash risk

Yang, Chang; Chen, Xin; Xian, Chen

doi:10.1016/j.pacfin.2020.101387

Cited by 11 publications

(6 citation statements)

References 67 publications

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“…We use Duvol and Ncskew to measure stock price crash risk according to previous studies (Chen et al, 2001; Li, Wang, et al, 2021; Yang et al, 2021). Table 10 shows the results of the influence of the co‐shareholding network on stock price crash risk.…”

Section: Influencing Mechanism Analysismentioning

confidence: 99%

“…Large shareholders can use information advantages to distract investors' attention in the market, thus increasing market noise. Previous studies have found that multiple large shareholders in a focal company could increase the stock price crash risk (Yang et al, 2021), increasing stock volatility (Gabaix et al, 2006) and ultimately influencing firm value (Cai et al, 2016). Although these studies have analysed how large shareholders can affect a firm's economic consequences, they still ignore how large shareholders can use their information advantage to impact information transmission in the market, especially the impact of media coverage.…”

Section: Introductionmentioning

confidence: 99%

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How do co‐shareholding networks affect negative media coverage? Evidence from China

Wang

Hou

Liu

2023

Accounting & Finance

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This paper explores the relationship between the co‐shareholding network and negative media coverage in the context of China. We find that the high degree centrality and structural holes of firm's co‐shareholding networks have negative effects on the amount and severity of negative media coverage but through differentiated mechanisms. Focal firms in high degree centrality positions can decrease negative coverage by information sharing through the network, but focal firms in the position of structural holes reduce negative coverage through information control. Our findings can complement both research on the disparate impacts of co‐shareholding networks and the media spin effect.

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Section: Influencing Mechanism Analysismentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

How do co‐shareholding networks affect negative media coverage? Evidence from China

Wang

Hou

Liu

2023

Accounting & Finance

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“…Intermediary position We then investigate the heterogeneous effects of network positions on crash risk across firms with different insider ownership concentration. To measure the insider ownership concentration, we adopt a variable Herfindahl index (Herfindahl), which is calculated by summing the squared percentage of shares controlled by the top 10 largest shareholders in year t (e.g., An & Zhang, 2013;Yang et al, 2021). TOP10_HHI is defined as one if the Herfindahl value is above median within the same industry and year cohort or zero otherwise.…”

Section: Central Positionmentioning

confidence: 99%

Collusion or monitoring? Connected institutional investors and stock price crash risk in China

Zhang

Liang

2022

Syst Res Behav Sci

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This paper investigates the impact of connected institutional investors on stock price crash risk. We document that the closer institutions are to the central position of the network, the greater the stock price crash risk, whereas the closer they are to the intermediary position, the smaller the stock price crash risk. Such results remain strong after conducting several robustness checks. Further evidences demonstrate that the collusion effect of central position, which is more pronounced for firms with higher insider ownership concentration, lower institutional ownership and lower regional marketization index, works through managers' asymmetric news disclosure, whereas the monitoring effect of intermediary position, which is more pronounced for firms with higher insider ownership concentration, higher institutional ownership and lower regional marketization index, works through better informativeness and control. Overall, our analyses provide insights into the relation between social embeddedness of individual economic activities and corporate governance.

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“…The impact of vertical interlocking on enterprises may be very different from that on mature capital markets (Allen et al, 2005;Cui et al, 2020;Yang et al, 2021). In China, it is more popular for executives to hold vertical positions.…”

Section: Introductionmentioning

confidence: 99%

“…Compared with mature markets in developed countries, investors in emerging markets are poorly protected, and the market supervision system is not sound. The impact of vertical interlocking on enterprises may be very different from that on mature capital markets (Allen et al, 2005; Chen & Yang, 2021; Cui et al, 2020; Yang et al, 2021). In China, it is more popular for executives to hold vertical positions.…”

Section: Introductionmentioning

confidence: 99%

Research on the masking effect of vertical interlock on ESG greenwashing in the context of sustainable Enterprise development

Liu

Hao

et al. 2023

Corp Soc Responsibility Env

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Based on impression management and principal‐agent theory, this article considers Chinese A‐share listed companies from 2014 to 2020 to explore whether vertical interlocking promotes the sustainable development of enterprises from the perspective of environmental, social, and governance (ESG) report greenwashing. The results show that vertical interlocking increases ESG report greenwashing and hides negative ESG information; these results remained valid through a series of robustness tests. Mechanism analysis shows that the purpose of ESG report greenwashing by vertically interlocked executives is to hollow out minority shareholders rather than to cover up earnings management to conceal actual ESG information. The vertical interlocking of executives more significantly promotes ESG report greenwashing when the property is state‐owned, has poor internal supervision mechanisms, has a large executive team and has no senior executives with green experience. This study furthers the relevant research on the factors affecting the sustainable development of enterprises and enriches and expands studies of the role of the vertical interlock from the perspective of information concealing, providing a more in‐depth reference for promoting the sustainable development of enterprises.

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Vertical interlock and stock price crash risk

Cited by 11 publications

References 67 publications

How do co‐shareholding networks affect negative media coverage? Evidence from China

How do co‐shareholding networks affect negative media coverage? Evidence from China

Collusion or monitoring? Connected institutional investors and stock price crash risk in China

Research on the masking effect of vertical interlock on ESG greenwashing in the context of sustainable Enterprise development

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