Agency Problem or Trade-off Hypothesis: The Implication of Corporation Cash Holding——Test Based on Crash Risk

DOI

10.2991/978-94-6463-036-7_255How to use a DOI?

Keywords

Cash holding; Stock price crash risk; Agency theory

Abstract

Based on the data of Shanghai-Shenzhen A-share listed companies in China from 2007 to 2019, the relationship between cash holding level and the risk of stock price collapse was verified. The study found that the increase in cash holdings of enterprises, increased management opportunistic behavior, leading to management can make higher on-the-job consumption and seek more compensation, when they implement these behaviors, they are bound to try to conceal; Over time, these actions are eventually discovered by the market and trigger a stock price crash, which manifests itself in cash holdings in capital markets as increasing the risk of a share price collapse; Further analysis found that effective internal and external governance can constrain management's opportunistic behavior.

Copyright

© 2022 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Shujun Sheng
PY  - 2022
DA  - 2022/12/31
TI  - Agency Problem or Trade-off Hypothesis: The Implication of Corporation Cash Holding——Test Based on Crash Risk
BT  - Proceedings of the 2022 2nd International Conference on Economic Development and Business Culture (ICEDBC 2022)
PB  - Atlantis Press
SP  - 1703
EP  - 1711
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-036-7_255
DO  - 10.2991/978-94-6463-036-7_255
ID  - Sheng2022
ER  -