Equity Incentives and Stock Price Crash Risk: Evidence from China

Yitong Chen; Chenxi Jiang; Tianyue Liu

doi:10.54691/bcpbm.v26i.2046

Authors

Yitong Chen
Chenxi Jiang
Tianyue Liu

DOI:

https://doi.org/10.54691/bcpbm.v26i.2046

Keywords:

Equity Incentives; Stock Price Crash Risk; China Stock Market; Institutional Ownership; Data Analyze.

Abstract

The impact of equity incentive on stock price crash risk has been investigated in this paper. We solve these problems by u-sing computer tools. We use Stata to analyze the relationship bet-ween these two variables in Chinese Market, and a variety of rig-orous model calculation to obtain the results of the study. Accordi-ng to the results, equity incentive in China is positively associated with stock prick crash risk. Based on a series of robustness tests, including alternative measures and multi-fixed effects model anal-ysis, the relationship remained positive. Furthermore, it is found that the impact of equity incentive on the stock price crash risk is more pronounced in large and high institution ownership compan-ies. According to our research, companies need to control the ext-ent of equity incentives. These results shed light for the relations-hip between equity incentives and stock price crash risk is positiv-e, especially when the size of company is huge enough…….

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