Proceedings of the 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021)

The Impact of Cash Holding on Stock Price Crash Risk

Authors
Zhuxin Chen1, *
1Ocean University of China, Qing Dao, Shan Dong 266000, China,chenzhuxin@stu.ouc.edu.cn
*Corresponding author. Email: chenzhuxin@stu.ouc.edu.cn
Corresponding Author
Zhuxin Chen
Available Online 15 December 2021.
DOI
10.2991/assehr.k.211209.252How to use a DOI?
Keywords
cash holding; stock price crash risk; operating cash flow; agency theory
Abstract

This paper develops a fixed-effect model to examine the effect of cash holding on stock price crash risk with data of Chinese listed firms from 2007 to 2018. The results indicate that corporate cash holding is positively related to stock price crash risk. Based on this consequence, it is proved that the positive relationship between operating cash flow and stock price crash risk is more pronounced. In addition, the nature of the state-owned property and “big four” auditors can strengthen the relationship of the cash holding and crash risk. This paper validates the negative effects of agency problems, confirming that the interest conflicts between stockholders and executives do increase the crash risk. It also provides a reference for investors to judge the investment risk of a firm. Moreover, it provides a new way for regulatory authorities to supervise the risk of enterprises and therefore maintain the stability of the market.

Copyright
© 2021 The Authors. Published by Atlantis Press International B.V.
Open Access
This is an open access article under the CC BY-NC license.

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Volume Title
Proceedings of the 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021)
Series
Advances in Economics, Business and Management Research
Publication Date
15 December 2021
ISBN
978-94-6239-483-4
ISSN
2352-5428
DOI
10.2991/assehr.k.211209.252How to use a DOI?
Copyright
© 2021 The Authors. Published by Atlantis Press International B.V.
Open Access
This is an open access article under the CC BY-NC license.

Cite this article

TY  - CONF
AU  - Zhuxin Chen
PY  - 2021
DA  - 2021/12/15
TI  - The Impact of Cash Holding on Stock Price Crash Risk
BT  - Proceedings of the 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021)
PB  - Atlantis Press
SP  - 1551
EP  - 1562
SN  - 2352-5428
UR  - https://doi.org/10.2991/assehr.k.211209.252
DO  - 10.2991/assehr.k.211209.252
ID  - Chen2021
ER  -