Monitoring or tunneling? Information interaction among large shareholders and the crash risk of the stock price

Based on A-share-listed companies on the Chinese stock market, we investigate the impact of information interaction among large shareholders (IILS) on stock price crash risk. We find that IILS is negatively correlated with crash risk. This finding is robust to include other crash risk determinants i...

Full description

Saved in:
Bibliographic Details
Published inPacific-Basin finance journal Vol. 65; p. 101469
Main Authors Li, Jie, Wang, Lidan, Zhou, Zhong-Qiang, Zhang, Yongjie
Format Journal Article
LanguageEnglish
Published Elsevier B.V 01.02.2021
Subjects
Crash risk
Information interaction
Monitoring effect
Tunneling effect
Monitoring effect
Crash risk
Tunneling effect
Information interaction
Online AccessGet full text

Cover

More Information
Summary:Based on A-share-listed companies on the Chinese stock market, we investigate the impact of information interaction among large shareholders (IILS) on stock price crash risk. We find that IILS is negatively correlated with crash risk. This finding is robust to include other crash risk determinants identified in the literature. The results of the influencing mechanism analysis show that IILS influences crash risk through the “monitoring effect” rather than the “tunneling effect”. Moreover, the above results remain valid after considering possible endogenous problems. Finally, we verify the existence of private information interaction in the coshareholding network. •We examine the impact of information interaction among large shareholders (IILS) on crash risk in China.•IILS is negatively correlated with crash risk.•IILS influences crash risk through the “monitoring effect” rather than the “tunneling effect”.•The existence of information interaction in coshareholding networks is verified.
ISSN:0927-538X
1879-0585
DOI:10.1016/j.pacfin.2020.101469