Individualism and stock price crash risk

Zhe An; Zhian Chen; Donghui Li; Lu Xing

doi:10.1057/s41267-018-0150-z

Individualism and stock price crash risk

Zhe An, Zhian Chen, Donghui Li, Lu Xing

Management

Research output: Contribution to journal › Article › peer-review

53 Citations (SciVal)

Abstract

Employing a sample of 26,473 firms across 42 countries from 1990 to 2013, we find that firms located in countries with higher individualism have higher stock price crash risk. Furthermore, individualism can be transmitted by foreign investors from overseas markets to influence local firms’ crash risk, and can exacerbate the impact of firm risk taking and earnings management on crash risk. Moreover, the positive relation between individualism and crash risk is amplified during the global financial crisis and attenuated by enhanced country-level financial information transparency and the adoption of International Financial Reporting Standards.

Original language	English
Pages (from-to)	1208-1236
Number of pages	29
Journal	Journal of International Business Studies
Volume	49
Issue number	9
DOIs	https://doi.org/10.1057/s41267-018-0150-z
Publication status	Published - 1 Dec 2018

Keywords

cross-country study
individualism
national culture
stock price crash risk

ASJC Scopus subject areas

Business and International Management
Business, Management and Accounting(all)
Economics and Econometrics
Strategy and Management
Management of Technology and Innovation

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10.1057/s41267-018-0150-z

https://eprints.gla.ac.uk/160978/Licence: Unspecified

Cite this

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title = "Individualism and stock price crash risk",

abstract = "Employing a sample of 26,473 firms across 42 countries from 1990 to 2013, we find that firms located in countries with higher individualism have higher stock price crash risk. Furthermore, individualism can be transmitted by foreign investors from overseas markets to influence local firms{\textquoteright} crash risk, and can exacerbate the impact of firm risk taking and earnings management on crash risk. Moreover, the positive relation between individualism and crash risk is amplified during the global financial crisis and attenuated by enhanced country-level financial information transparency and the adoption of International Financial Reporting Standards.",

keywords = "cross-country study, individualism, national culture, stock price crash risk",

author = "Zhe An and Zhian Chen and Donghui Li and Lu Xing",

note = "Funding Information: All authors have equal contributions to this article. We are grateful to Lemma Senbet (the editor), two anonymous reviewers, and an additional resource person for their insightful and constructive comments. For helpful suggestions, we thank Chen, John Goodell, Ambrus Kecsk{\'e}s, Dong Wook Lee, and Hongping Tan; conference participants at the 2016 AsianFA Annual Conference, the 2016 Young Finance Scholars{\textquoteright} Conference, the 2016 INFINITI Conference on International Finance, the 2017 FMA Asia/Pacific Conference, and the 2017 EFMA Annual Conference; and seminar participants at the universities of Edinburgh, Essex, Glasgow, Jinan, and Sun Yat-sen. Zhe An acknowledges the financial support from the New Academic Staff Support Grant of Monash University. Publisher Copyright: {\textcopyright} 2018, Academy of International Business.",

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doi = "10.1057/s41267-018-0150-z",

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AU - An, Zhe

AU - Chen, Zhian

AU - Li, Donghui

AU - Xing, Lu

N1 - Funding Information: All authors have equal contributions to this article. We are grateful to Lemma Senbet (the editor), two anonymous reviewers, and an additional resource person for their insightful and constructive comments. For helpful suggestions, we thank Chen, John Goodell, Ambrus Kecskés, Dong Wook Lee, and Hongping Tan; conference participants at the 2016 AsianFA Annual Conference, the 2016 Young Finance Scholars’ Conference, the 2016 INFINITI Conference on International Finance, the 2017 FMA Asia/Pacific Conference, and the 2017 EFMA Annual Conference; and seminar participants at the universities of Edinburgh, Essex, Glasgow, Jinan, and Sun Yat-sen. Zhe An acknowledges the financial support from the New Academic Staff Support Grant of Monash University. Publisher Copyright: © 2018, Academy of International Business.

PY - 2018/12/1

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N2 - Employing a sample of 26,473 firms across 42 countries from 1990 to 2013, we find that firms located in countries with higher individualism have higher stock price crash risk. Furthermore, individualism can be transmitted by foreign investors from overseas markets to influence local firms’ crash risk, and can exacerbate the impact of firm risk taking and earnings management on crash risk. Moreover, the positive relation between individualism and crash risk is amplified during the global financial crisis and attenuated by enhanced country-level financial information transparency and the adoption of International Financial Reporting Standards.

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KW - national culture

KW - stock price crash risk

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Individualism and stock price crash risk

Abstract

Keywords

ASJC Scopus subject areas

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