Abstract
ABSTRACT This paper uses firm-specific released news data in the Chinese market to examine the relationship between news sentiment and stock price crash risk between 2007 and 2017. To do so, we develop a firm-specific news sentiment index by quantifying the textual contents in the news. Our results show that firms with better news sentiment are less likely to be involved in future stock crash risk. Also, we find that CEOs approaching retirement are an important mechanism for explaining the relationship between news sentiment and firm crash risk. Our main findings still hold after conducting several robustness tests.
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