Managers' Early Traumatic Experience And Stock Price Crash Risk

The frequent occurrence of stock price crash in China's capital market has seriously damaged investors' wealth and hampered the sustainable and healthy development of China capital market.The causes of the stock price crash risk have arouse wide concern from the theoretical,practical and regulatory communities.Based on the information hoarding hypothesis and the background of China's corporate governance and information disclosure,in the cross field of psychology and management,this thesis investigated the influence of managers' early traumatic experiences on the stock price crash risk from the perspective of managerial traits and limited rationality.Firstly,based on a review of relevant research at home and abroad,the theoretical analysis framework of the relationship between managers' early traumatic experiences and the stock price crash risk is systematically refined from trauma psychology,imprinting theory,peer effect theory,upper echelons theory,and information hoarding hypothesis.After that,drawing on the idea of natural experiments,taken the great famine of 1959-1961,which spread almost all over the country and are not controlled by human,as an external traumatic event,from both normative and empirical perspectives,A-share listed companies in Shanghai and Shenzhen from 2007-2017 were selected as the research object,statistical and measurement methods,including OLS regression,logistic regression,double-difference estimation,mediation effects test and moderator variable analysis,are applied in exploring three questions:(1)the impact and path of managers' early traumatic experiences of great famine on the stock price crash risk,(2)whether managers' later education can modify the impact of traumatic experiences on the stock price crash risk,and(3)whether management power moderates the impact of traumatic experiences on the stock price crash risk.Research findings are as follows.(1)Managers' early traumatic experience of great famine has a positive impact on the stock price crash risk and the higher the severity of their famine experience,the higher the stock price crash risk;the longer duration of their famine experience,the higher the stock price crash risk.Managers who experienced the trauma of the great famine during early life influenced stock price crash risk by hoarding the bad news.(2)Later educational experiences modify the adverse effects of managers' early traumatic experiences of great famine on the stock price crash risk.(3)Power contributes to the adverse effect of managers' early famine trauma experiences on the stock price crash risk.When managers have more power,their later educational experiences have a greater corrective effect on how their early great famine traumatic experiences affecting the stock price crash risk.Finally,based on the research findings,this thesis makes relevant policy recommendations in three areas: information disclosure regulation,corporate governance design and management selection mechanism.This thesis puts forward a new explanation perspective of stock price crash risk,and expands the research on the influencing factors of stock price crash risk.The hypothesis of homogeneity and self-interest of managers in the information hoarding hypothesis is relaxed,and the information hoarding hypothesis is inherited and developed.The thesis also adds to the research literature on the economic consequences of managers' early traumatic experience and enriches the research content of upper echelons theory and behavioral finance theory.This thesis helps the regulatory authorities to clarify the underlying causes of stock price crash,reduce the stock price crash risk more effectively,and provides a reference basis for improving corporate governance as well as optimizing management appointment.