Business Strategy,Institutional Holdings And Stock Price Crash Risk

Stock price crash is an extreme phenomenon in the capital market.As it has a great impact on the stability of the capital market and may endanger the operation of the real economy,this phenomenon has attracted much attention from all sectors of society.The causes and influencing factors of stock price crash risk are also hot research topics in the field of finance and corporate finance in recent years.About the causes of the stock price crash,the "bad news hoards hypothesis" thought mainly is the management conceals the bad news for the sake of career,salary contract,empire building and other private interests.When the bad news accumulates to a point within the company and cannot be hidden any longer,it is released to the market and then causes the company's stock price crash.Based on this hypothesis,many existing researches have discussed the factors influencing the risk of stock price crash from the aspects of the self-interest motive and behavior of the management,the characteristics of the management,information disclosure,internal and external governance,etc.Business strategy is the overall plan for the development of corporates,which defines the fundamental long-term goals of corporates and the course of action and resource allocation for the realization of these goals.As the blueprint of the corporate development,business strategy tracts,restricts and determines all the operation and management activities of the corporate.Previous studies have shown that business strategy has a significant impact on corporate earnings features,risk bearing,cash flow status,accounting information quality,tax avoidance,investment behavior and executive incentive mechanism.In this case,the degree of bad news hidden by the management of corporates which have different business strategy may vary,so the business strategy may be a deeper factor influencing the risk of stock price crash.This paper focuses on the influence of business strategy on the risk of stock price crash and its influencing path.Meanwhile,this paper also discusses the moderating effect of institutional investors' shareholding.On the one hand,in this paper,I conduct theoretical analysis based on principal-agent theory,information asymmetry theory,business strategy hierarchy theory and relevant research literature.On the other hand,I select the data of China's A-share listed companies from 2012 to 2017 for empirical test.Finally,this paper finds that:(1)Business strategy has a significant impact on the stock price crash risk.Compared with the defenders,the prospectors have a higher risk of stock price crash.(2)Institutional investors' shareholding did not play an inhibitory role,but intensified the positive correlation between business strategy and stock price crash risk.(3)Business strategy influences the risk of stock price crash by influencing the intensity of management's equity compensation incentive,the level of excessive investment and external financing demand.The possible contributions of this paper are:(1)The research on the influence of business strategy on the stock price crash risk enriches the research on the factors affecting the stock price crash risk,and is conducive to a more comprehensive understanding of the factors influencing the stock price crash risk;(2)Discussing the economic consequences of business strategy from the perspective of stock price crash risk may broaden the application of business strategy in the field of corporate finance and accounting research,and help to better understand the role and impact of business strategy on corporate management.(3)The analysis of the moderating effect of institutional investors' shareholding on the relationship between business strategy and stock price crash risk enriches studies on the impact of institutional investors on the capital market.