Do natural disasters affect stock price crash risk? Evidence from emerging markets

Abstract

This study shows a significantly positive relationship between natural disasters and firm-level stock price crash risk using a sample of listed firms from emerging markets.The channel tests suggest that natural disasters affect crash risk by increasing corporate risk-taking, dampening firm fundamentals, and aggravating bad news hoarding. The research further identifies that the effect of natural disasters on crash risk is moderated by country-level and firm-level characteristics. Overall, our findings contribute to a broader understanding of the economic outcomes of natural disasters in emerging markets.