Financial Market Stability, Corporate Strategic Radicalization and Analyst Coverage: Analysis Based on the Perspective of Stock Price Crash Risk - Empirical Evidence from Shanghai and Shenzhen A-Share Listed Companies

Abstract

Information is the compass of the financial market, and analysts, as a bridge between companies and investors, play a role in transmitting information. Therefore, it is crucial to study the influencing factors of analyst coverage. This paper examines whether corporate strategic radicalization affects analyst coverage using a sample of A-share listed companies traded on SSE and SZSE with panel data from 2008-2018, and examines whether the risk of corporate stock price crash exacerbates the impact of corporate strategic radicalization on analyst coverage. It is found that (1) corporate strategic radicalization has a significant positive effect on analyst coverage; and (2) stock price crash risk has a positive effect in promoting the relationship between corporate strategic radicalization and analysts. In this paper, the samples are grouped according to the type of corporate ownership as well as corporate executives' concurrent positions, respectively, for further analysis and discussion, and the findings are unaffected. The conclusions still stand after considering the endogeneity issue using the lagged term approach. This paper not only supplements the research literature on analyst coverage, but also provides a policy reference for government departments to formulate corporate regulatory policies.