Divergence of Cash Flow and Voting Rights, Opacity, and Stock Price Crash Risk: International Evidence

• 成果类型: Article
• 署名作者: Hong, Hyun A.; Kim, Jeong-Bon; Welker, Michael
• 署名单位: University of California System; University of California Riverside; City University of Hong Kong; University of Waterloo; Queens University - Canada
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/1475-679X.12185
• 发表日期: 2017
• 页码: 1167-1212
• 关键词: dual-class firms; earnings management; private benefits; corporate governance; Investor protection; public corporations; Ownership structure; ULTIMATE OWNERSHIP; accounting quality; UNITED-STATES

摘要

This study investigates whether and how the deviation of cash flow rights (ownership) from voting rights (control), or simply the ownership-control wedge, influences the likelihood that extreme negative outliers occur in stock return distributions, which we refer to as stock price crash risk. We do so using a comprehensive panel data set of firms with a dual-class share structure from 20 countries around the world for the period of 1995-2007. We predict and find that opaque firms with a large wedge are more crash prone than opaque firms with a small wedge. In addition, we predict and find that the positive relation between the wedge and crash risk is less pronounced for firms with more effective external monitoring and for firms with greater growth opportunities. The results of this study are broadly consistent with Jin and Myers's theory that agency costs, combined with opacity, exacerbate stock price crash risk.