Abstract
This study explores the influences of managerial ownership on future stock price crash risk. Managerial ownership induces manager to conceal bad news and choose sub-optimal investment policies, which increases stock price crashes. Using a sample of China’s listed firms for the period 2004-2014, we find managerial ownership is significantly and positively related to the firm’s future stock price crash risk. In addition, we find that the link between managerial ownership and crash risk is more pronounced for firms with higher agency cost, namely those with relatively higher administrative expense ratio, lower asset utilization ratio, and lower product market competition.
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