Carbon emission trading system and stock price crash risk of heavily polluting listed companies in China:based on analyst coverage mechanism

This study reveals the inconsistencies between the negative externalities of carbon emissions and the recognition condition of accounting statements.Hence,the study identifies that heavily polluting enterprises in China have severe off-balance sheet carbon reduction risks before implementing the carbon emission trading system(CETS).Through the staggered difference-in-difference(DID)model and the propen-sity score matching-DID model,the impact of CETS on reducing the risk of stock price crashes is examined using data from China’s A-share heavily polluting listed companies from 2007 to 2019.The results of this study are as follows:(1)CETS can significantly reduce the risk of stock price crashes for heavily polluting companies in the pilot areas.Specifically,CETS reduces the skewness(negative conditional skewness)and down-to-up volatility of the firm-specific weekly returns by 8.7%and 7.6%,respectively.(2)Heterogeneity analysis further shows that the impacts of CETS on the risk of stock price crashes are more significant for heavily polluting enterprises with the bear market condition,short-sighted management,and intensive air pollution.(3)Mechanism tests show that CETS can reduce analysts’coverage of heavy polluters,reducing the risk of stock price crashes.This study reveals the role of CETS from the stock price crash risk perspective and helps to clarify the relationship between climatic risk and corporate financial risk.

Investor Attention,Analyst Optimism,and Stock Price Crash Risk

This paper used the A-shares listed companies in China as samples,constructed a comprehensive indicator of investor attention,and conducted an empirical analysis on the correlations among investor attention,analyst optimism,and stock price crash risk.The results indicated that investor attention aggravates the stock price crash risk and has a positive effect on analyst optimism.Meanwhile,the analyst optimism plays a mediating role in the positive correlation between investor attention and stock price crash risk.In addition to that,institutional investor attention also has direct and indirect effects on the crash risk.

Corporate pledgeable asset ownership and stock price crash risk

We investigate how a firm’s corporate pledgeable asset ownership(CPAO)affects the risk of future stock price crashes.Using pledgeable asset ownership and crash risk data for a large sample of U.S.firms,we provide novel empirical evidence that a firm’s risk of a future stock price crash decreases with an increase in its pledgeable assets.Our main findings are valid after conducting various robustness tests.Further channel tests reveal that firms with pledgeable assets increase their collateral value,thereby enhancing corporate transparency and limiting bad news hoarding,resulting in lower stock price crash risk.Overall,the results show that having more pledgeable assets enables easier access to external financing,making it less likely that managers will hoard bad news.

Personal data security and stock crash risk:Evidence from China’s Cybersecurity Law

Using China’s Cybersecurity Law(CSL)as an exogenous shock,I examine how personal data security affects stock crash risk.I find that the stock crash risk of treatment firms(which collect personal data)significantly decreases after the CSL,and such decrease is larger when firms face greater personal data breach risk and have less transparent information environments before the CSL.Furthermore,treatment firms increase their investment in personal data protection after the CSL.Finally,enhanced personal data security increases firm value and promotes firms’social responsibility to stakeholders.Overall,I provide evidence of the importance of data security for the digital economy from the perspective of capital market stability,which may present implica-tions for data security policy worldwide.

Can executive mobility reduce the stock price crash risk?Evidence from China

The 21st century has witnessed increasing fluctuations in boththe real economy and financial markets around the world. Howto maintain the stability of the capital market has attracted moreserious attention. This paper examines the impact of executivemobility on the stock price crash risk at the company level. Basedon the data of A-share listed companies during 2010–2019, ourempirical results show that executive mobility can effectivelyreduce the stock price crash risk. Furthermore, our research confirms that employee salaries play an intermediary role in theimpact of executive mobility on the stock price crash risk. Thispaper has important implications for companies in emerging markets to optimise the structure of their executive teams.

Rumors and price efficiency in stock market:An empirical study of rumor verification on investor Interactive platforms

Using rumor verification data from investor interactive platforms,we investigate the effect of stock market rumors on price efficiency.We find favorable rumors are positively correlated with stock price synchronicity,while unfavorable rumors are negatively correlated with stock price synchronicity.Both favorable and unfavorable rumors are positively correlated with stock mispricing levels,and stock price crash risk.Mechanism tests reveal that favorable rumors about industry leaders have industry spillover effects.The effect of rumors on mispricing levels and stock price crash risk are more pronounced when there are more retail investors.Further analysis shows stronger detrimental impacts of rumors on price efficiency for small-cap companies,companies with low information transparency and companies with low institutional ownership.

Research on the influence of equity pledge on stock price crash risk:based on financial shock of 2015 stock market crisis

The 2015 Chinese stock market crisis triggered liquidation because of equity pledge so that the leverage effect of the small probability event with severe results got intensive attention from investors.It is found that the effects of equity pledge on stock price crash risk reversed significantly before and after the 2015 stock market crisis.In the mechanism analysis,we further find that the equity pledge influenced the stock price crash risk by longer suspension and greater price fluctuation.The shareholding ratio of institutional investors and information environment also had a significant moderating effect on the influence of equity pledge on stock price crash risk.Alternative interpretation tests excluded the tunnel effect and pressure effect by shareholders and incentive effect by management.This study by analysing empirical data provides evidence on the change of investors’risk recognition,which is caused by financial shock,in the Chinese capital market.

Large Shareholder Tunneling and Risk of Stock Price Crash： Evidence from China

Although several studies have examined the economic consequences of large shareholders＇ tunneling behavior, little attention has been paid to the negative effects of tunneling on firms＇ extreme events. In this article, we investigate how tunneling behavior affects firm-level stock price crashes. The findings indicate that the probability of stock price crashes is positively associated with the extent of tunneling behavior by large shareholders. The positive relationship is more pronounced after the split of share structure reform and is moderated by the firm＇s financial conditions. This study contributes to the emerging body of literature focusing on the economic consequences of tunneling and stock price crashes. The conclusions drawn from the study also provide a frame of reference for investor protection and investment portfolios based on large shareholders＇ tunneling behavior in China.

Does a national industrial policy promote financial market stability?A study based on stock price crash risk

Whether the implementation of a national industrial policy can maintain stability in the financial market is a question of theoretical and practical significance. Using data from China’s non-financial listed firms from 2007 to 2020,we find that a national industrial policy lowers stock price crash risk. We find that the effect of an industrial policy on lowering stock price crash risk is more pronounced in regions with low levels of regional marketization and if firms have high external uncertainty, low total asset turnover, greater earnings management and receive small increments of long-term loans and fewer government subsidies, suggesting that industrial policies lower stock price crash risk by improving firm fundamentals and reducing external uncertainty,agency costs and information asymmetry.

Institutional environment and risk of a stock price crash:evidence from China

Stock price crashes damage China’s macro-financial stability,restrict economic growth,and can lead to huge losses in wealth for investors.Therefore,how to reduce the risk for stock price crashes is an important theoretical and practical issue.This paper mainly studies the effects of the institutional environment that creates risks for stock price crashes.Using China’s non-financial A-share listed companies from 1997 to 2012 as an example,this paper finds that the lower the level of government intervention is,the better the legal environment is,the faster the market process in business area is,then the lower the risks for stock price crashes will be.To solve the endogenous problem between the institutional environment and the risk of a stock price crash,this paper uses the number of seaports and whether the commercial ports or leased territories are opened after the first Opium War in Qing Dynasty as instrumental variables of the institutional environment.We find that the above conclusion is still valid with the method of 2SLS regression.Furthermore,this paper also finds that the government intervention index,the legal environment index,and the market index are negatively related to stock price synchronicity to a significant degree.These conclusions illustrate that the institutional environment is an important factor in the healthy and stable development of the capital market,which has important implications for policy markers or regulators to develop policies to promote the stable development of the stock market,to control market risk of listed companies,and to make investment decisions.

A Tale of Two“Skewness”:Managerial Epidemic Experience,Probability Weighting and Financial Market Stability

Under probability weighting,entrepreneurs with skewness preference tend to seek rightskewed and avoid left-skewed risks.We show that Chinese firms managed by CEOs with professional epidemic experience,i.e.,who previously experienced the outbreak of SARS during their tenure as high level executives,have a lower stock price crash risk measured by the negative skewness of stock prices in subsequent periods.In particular,those firms intentionally avoid stock price crashes by adopting more conservative strategies in decisionmaking.Overall,we provide the first evidence on the unintended effect of entrepreneurs'subjective judgments of the probabilities of disease outbreaks on financial market stability.These have long-term implications for the financial system.

The potential harms of goodwill impairment avoidance: Evidence based on future performance and stock prices

The rapidly increasing volume of goodwill assets in the capital market generates potential risks due to the possibility of an untimely recognition of goodwill impairment.In this paper,we investigate the financial consequences of goodwill impairment avoidance based on firms’future performance and stock prices.Using Chinese A-share listed firms with goodwill balances,we find that avoiding goodwill impairments negatively affects a firm’s performance growth and increases its risk of a future stock price crash.These adverse effects continue for the three years following the goodwill impairment avoidance.Our results indicate that goodwill impairment avoidance has detrimental impacts on a firm’s future performance and stock price and that these impacts are persistent.Our conclusions are helpful for regulators on how to prevent the risks hidden in goodwill impairment recognition and maintain the stable development of the financial market.