Executive Violations,Institutional Investors And Stock Price Crash Risk

Stock price crashes in China's A-share market have occurred frequently in recent years.The stock market fluctuated many times,many stocks continuously fell.These phenomena have heavily harmed the interests of investors and seriously damaged the stability of the capital market.So the risk of stock price crashes has become a hot issue.As a major participant in the operation and management of listed companies,the legal compliance awareness and moral values of senior executives have received extensive attention from investors.Executive violations often mean that there are defects in management integrity,internal control and corporate governance,etc.Once such bad news is released or known to investors,investors tend to "vote with their feet",causing the company's share price to fall quickly in the short term,creating stock price crash risk.But unlike ordinary investors,the institutional investors have advantages of information,scale and market position in the capital market,which can strengthen the relationship with the listed companies,reduce the information asymmetry,and effectively supervise the activities of the listed companies and their executives through external governance.So when executive information is made public,the institutional investors don't have to "vote with your feet" in the same way as ordinary investors,or even increase the holdings when such bad news leads to undervaluation,mitigating the risk of a stock crash.Based on the financial data or transaction data of Chinese A-share listed companies from 2008 to 2017,and after summing up and summarizing the research results of domestic and foreign scholars,this paper uses descriptive statistics,correlation test and regression analysis to examine the relationship between executive violations,institutional investors and stock price crash risk.The study found that,(1)executives being penalized by the securities regulatory authorities for violations will increase the company's stock price crash risk;(2)executives' risk of stock price crashes due to corporate irregularities is higher than that caused by individual irregularities;(3)the higher shareholding ratio of institutional investors,the weaker the impact of executive irregularities on the stock price crash risk.These findings enrich the study of the factors affecting the company's stock price crash risk.At the same time,they also have certain enlightenment significances of strengthening corporate governance for listed companies,alleviating the principal-agent problem,strengthening market supervision by the securities regulatory authorities,and guiding investors to invest rationally,maintaining the stability of the capital market.