Corporate Accessibility and Stock Price Crash Risk

59 Pages Posted: 22 Dec 2015 Last revised: 22 Jun 2020

See all articles by Michael Firth

Michael Firth

Lingnan University - Department of Finance and Insurance

Sonia Man-Lai Wong

Sun Yat-Sen University (SYSU) - Department of Finance and Insurance

Xiaofeng Zhao

Lingnan University - Department of Finance and Insurance

Date Written: June 10, 2019

Abstract

We examine whether corporate accessibility to outside market participants can mitigate stock price crash risk in a weak public information environment. We measure accessibility by assessing whether outside investors can assess and communicate with firms via public communication channels (e.g., telephone, email, and online forums) in China. We find that accessible firms have a lower stock price crash risk than inaccessible firms, and that this effect increases with firms’ geographic distance to the country’s financial centers. Further analysis reveals that such effects are related to the role of accessibility in facilitating information gleaning and the arrangement of private meetings between firms and outside investors. Finally, our findings suggest that accessible firms accumulate less negative corporate news than inaccessible firms.

Keywords: Corporate accessibility, Communications, Information acquisition, Stock price crash risk, China

JEL Classification: G19, D89

Suggested Citation

Firth, Michael and Wong, Sonia Man-Lai and Zhao, Xiaofeng, Corporate Accessibility and Stock Price Crash Risk (June 10, 2019). Available at SSRN: https://ssrn.com/abstract=2706977 or http://dx.doi.org/10.2139/ssrn.2706977

Michael Firth

Lingnan University - Department of Finance and Insurance ( email )

Castle Peak Road
Tuen Mun, New Territories
Hong Kong
China
+852 2616 8160 (Phone)
+852 2466 4751 (Fax)

Sonia Man-Lai Wong

Sun Yat-Sen University (SYSU) - Department of Finance and Insurance ( email )

Tuen Mun
Hong Kong

Xiaofeng Zhao (Contact Author)

Lingnan University - Department of Finance and Insurance ( email )

8 Castle Peak Rd
Tuen Mun
Hong Kong

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