Equity Incentive and Idiosyncratic Volatility Using Dual Fixed-effect Method: Evidence from China
DOI:
https://doi.org/10.54691/bcpbm.v26i.2047Keywords:
Equity incentives; idiosyncratic volatility; China.Abstract
This article study the relationship between equity incentive and the Idiosyncratic volatility of the stocks. Based on the data among the A-share listed companies, the article use the dual fixed-effect method with industry and time fixed to build a model and use Stata to do the empirical analysis. As a result, the study shows that equity incentive increases the idiosyncratic volatility of the stock, and impact of equity incentive on idiosyncratic volatility is more pronounced in non-state-owned firms, with fewer analysts and a lower ratio of institutional investors. Robustness is checked by replacing different equity incentive variables and adding lag items.
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