The role of bad-news coverage and media environments in crash risk around the world

Qigui Liu, Jinghua Tang, Donghui Li, Lu Xing

Research output: Contribution to journalArticlepeer-review


Employing a large international sample across 34 countries, we find that media coverage of bad news reduces firms’ future stock price crash risk. This effect is strengthened when the country-level trust in news media and press freedom is high. Bad-news coverage not only conveys price-sensitive information that directly alleviates managers’ bad-news hoarding, but also disciplines managers’ opportunistic activities, such as earnings management and risk-taking, which in turn impedes the hoarding of bad news. Furthermore, the negative effect of bad-news coverage on future crash risk intensifies during the global financial crisis and weakens following the adoption of International Financial Reporting Standards.
Original languageEnglish
Pages (from-to)488-509
Number of pages22
JournalJournal of Empirical Finance
Early online date25 Apr 2023
Publication statusPublished - 30 Jun 2023

Bibliographical note

Qigui Liu acknowledges the financial support from the Ministry of Education, Humanities and Social Science Research Project of China (Project No.: 21YJA790038). Donghui Li acknowledges the financial support from the National Natural Science Foundation of China (Grant No.: 71873058).


  • Bad-news coverage
  • Crash risk
  • Press freedom
  • Trust in news media

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance


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