Proceedings of the 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021)

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The Impact of Corporate Cash Holding on Stock Price Crash Risk: Evidence from China

Authors
Yundi Gao1,a, †, *, Zihan Li2, b, †, *
1The University of Edinburgh, EH8 9JS, Edinburgh, United Kingdom,s1944606@ed.ac.uk
2Lancaster University, LA1 4YW, Lancaster, United Kingdom,liz69@lancaster.ac.uk
†

These authors contributed equally

*Corresponding author Email: as1944606@ed.ac.uk
Corresponding Authors
Yundi Gao, Zihan Li
Available Online 15 December 2021.
DOI
10.2991/assehr.k.211209.239How to use a DOI?
Keywords
cash holding; stock price crash risk; agency theory
Abstract

We develop the panel regression model to examine the effect of corporate cash holding on stock price crash risk with data of Chinese listed firms during 2007 to 2018. Based on our results, the corporate cash holding is positively associated with future stock price crash risk. This robustness of results is verified by conducting a series of checks including alternative sample, fixed effects model, and adding omitted control variables. Moreover, the impact of cash holding on stock price crash risk is more pronounced in state-owned enterprises and firms with higher analyst coverage and greater growth. This paper provides support for the agency theory about its effects on stock price crash risk, confirming that the interest conflicts between stockholders and executives do increase the crash risk. In addition, this paper suggests firms cautiously consider their cash holding level and rationally supervise management behavior.

Copyright
© 2021 The Authors. Published by Atlantis Press International B.V.
Open Access
This is an open access article under the CC BY-NC license.

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Volume Title
Proceedings of the 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021)
Series
Advances in Economics, Business and Management Research
Publication Date
15 December 2021
ISBN
10.2991/assehr.k.211209.239
ISSN
2352-5428
DOI
10.2991/assehr.k.211209.239How to use a DOI?
Copyright
© 2021 The Authors. Published by Atlantis Press International B.V.
Open Access
This is an open access article under the CC BY-NC license.

Cite this article

risenwbib
TY  - CONF
AU  - Yundi Gao
AU  - Zihan Li
PY  - 2021
DA  - 2021/12/15
TI  - The Impact of Corporate Cash Holding on Stock Price Crash Risk: Evidence from China
BT  - Proceedings of the 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021)
PB  - Atlantis Press
SP  - 1466
EP  - 1478
SN  - 2352-5428
UR  - https://doi.org/10.2991/assehr.k.211209.239
DO  - 10.2991/assehr.k.211209.239
ID  - Gao2021
ER  -