Institutional Investors’ Shareholding And Stock Price Crash Risk

After more than 30 years of development,China’s securities market has made a lot of achievements but compared with those mature overseas financial markets,there are still a lot of gaps.A stock price crash refers to a special market in which stock prices fall sharply due to severe shocks in the stock market.It will not only destroy the established social order in China’s stock market but also damage the normal and healthy operation of the whole Chinese market economy and cause a huge blow to the survival and development of enterprises.Finally,it will cause huge losses to the rights and interests of investors in the whole financial market,and even weaken the confidence of all investors in China’s market economy.To promote the high-quality development of the national economy and establish a modern market economic system in China,it will be crucial to grasp the bottom line of avoiding systemic financial risks.The stock price crash risk mainly occurs at the market level and the company level.However,since the stock price crash risk at the market level is also known as systemic risk,which is generally universal and non-dispersive,this paper focuses on the study of the stock price crash risk at the company level.As an external force of enterprise management,institutional investors can influence the timing,content,quantity,and other aspects of accounting information released by listed companies.China’s regulatory authorities initially introduced institutional investors to stabilize the market and improve the capital market system,but stock price crashes still occur frequently,reflecting the speculative and irrational phenomenon in the market.Whether institutional investors will stabilize stock prices or accelerate stock price crashes has been questioned by academics and investment circles.Therefore,it is of great research value to investigate the influence of institutional investors’ shareholding on the stock market.Based on reviewing relevant domestic and foreign literature and analyzing relevant theories,this paper takes the observation values of 23885 annual samples of China’s A-share listed companies in Shanghai and Shenzhen from 2003 to 2020 as the initial samples,constructs corresponding models,and adopts relevant empirical methods to investigate the relationship between institutional investors’ shareholding and stock price crash risk.The results show that :(1)the shareholding ratio of institutional investors significantly increases the risk of future stock price collapse;(2)The transparency of accounting information is an intermediary variable between institutional investors’ shareholding and the risk of the stock price collapse and plays a partial intermediary role between institutional investors’ shareholding and the risk of stock price collapse;(3)Further differentiating the heterogeneity of institutional investors,it is found that the shareholding of transactional institutional investors is more likely to increase the risk of the stock price collapse,while the shareholding of stable institutional investors is not significantly related to the risk of stock price collapse.(4)State-owned property rights strengthen the positive impact of the shareholding ratio of institutional investors on the risk of stock price collapse.The research conclusion of this paper provides some reference value for preventing and controlling the risk of stock price collapse at the company level in advance,further controlling institutional investors and guiding them to make value and long-term investments,as well as improving the efficiency of the financial market.