Common Ownership And Stock Price Crash Risk

Looking at China’s development history and foreign experience,the stability of the financial market not only affects the normal production and operation of enterprises,but also is crucial to the high-quality development of a country’s economy and long-term social stability.President Xi Jinping clearly pointed out in the report of the 19 th National Congress of the Communist Party: " Improve the financial supervision system and maintain the bottom line of systemic financial risks from breaking out ".However,in recent years,the intensification of Sino-US trade frictions and the repeated outbreaks of the new crown pneumonia epidemic have made the overall macroeconomic environment not optimistic,and China’s stock market has repeatedly experienced sharp rises and falls.The frequent occurrence of extreme market risks has greatly shocked China’s capital market,which has always been stable.In this regard,in the transition period from high-speed development to high-quality development in China,it is of great practical significance to conduct in-depth research on how to effectively alleviate the collapse of stock prices in China’s securities market and ensure the stability and order of the capital market.Stock price crash are generally characterized by a jump in the stock price without warning.The incomplete information rational expectation equilibrium framework believes that the risk of stock price crash stems from "the centralized release of private information of informed traders" and "the impetus of irrational buying and selling behavior of uninformed traders".Fundamentally,the agency problem between shareholders and management and the asymmetric internal and external information of the enterprise are the main reasons for the stock price crash.Solving these two types of problems is not only the key to mitigating the risk of stock price crash,but also the focus of corporate governance.As the logical starting point of corporate governance,a large number of scholars have found that the motivation and behavior of shareholders will have an important impact on corporate information disclosure,development strategy and other decisions.However,in the current research on the impact of equity structure on corporate behavior,most shareholders are regarded as completely rational and independent individuals,ignoring the resource advantage position and collaborative governance effect of equity network.In fact,in the Chinese and even global capital markets,the economic relationship between enterprises established by the equity network of common ownership has become very popular,and it is worth paying attention to what impact common ownership will have on enterprises and even the entire capital market.Based on this,this article discusses the relationship between shared shareholders and stock price crash risk.First of all,this article systematically reviews the relevant literature on the economic consequences of shared shareholders and the influencing factors of stock price crash risk,sorts out and summarizes the research status of related issues,and looks for breakthrough points in this study.Based on the principal-agent theory,information asymmetry theory,efficient market theory and information disclosure externality theory,this thesis puts forward the research hypothesis through rigorous theoretical analysis and reasonable logical deduction,that is,common ownership can reduce the risk of corporate stock price collapse by improving corporate governance and enhancing information transparency.Secondly,this article adopts empirical analysis methods to obtain the relevant data of China Main Board A-share listed companies from 2009 to 2020 based on multiple databases such as CSMAR,WIND and DIB,which further verifies the research hypothesis.Through the analysis of empirical results,it is found that the existence of common ownership will improve corporate governance and information disclosure quality,thereby significantly reducing the risk of stock price crash.The greater the number of companies in the equity network,the more significant the degree to which they suppress the risk of stock price crash.At the same time,this article distinguishes the type of institutional investors and the degree of competition in their industries,and finds that stable institutional investors will reduce the risk of stock price crash based on the long-term interests of enterprises.The fierce competitive environment in the industry can strengthen the positive impact of common ownership on the risk of stock price crash.Furthermore,this thesis analyzes the types of common ownership and finds that institutional shareholders,especially institutional investors of public funds,have a more significant inhibitory effect on the risk of stock price crash.Finally,this article draws the main research conclusions based on the empirical results of common ownership and stock price crash risk.According to the current situation of the rapid development of common ownership and the widespread rise and fall of stock prices in the capital market,it provides relevant enlightenment and suggestions for improving corporate governance and stabilizing the development of the capital market from three aspects: common ownership,listed companies and regulators.It is hoped that the relevant conclusions of this article can improve the information asymmetry between listed companies and investors,improve the efficiency of market pricing,and promote the efficient and stable development of the capital market.The research contributions of this article are as follows:(1)This article supplements the relevant research on the economic consequences of common ownership.The current literature has not yet reached a unified conclusion on whether common ownership play the role of "collaborative governance" or promote the "manipulation and collusion" of enterprises.Based on the perspective of stock price crash risk,this thesis finds that common ownership play an active governance role under the motivation to maximize portfolio value,providing new evidence for the positive synergy effect of common ownership.The research on common ownership and stock price crash risk improves the relevant theoretical system of the economic consequences of common ownership to a certain extent,and provides new ideas and directions for the in-depth study.(2)This thesis expands the research on stock price crash risk.Previous studies on stock price crash risk have been based on the characteristics of senior executives,equity structure and other corporate characteristics,and few literatures has considered the impact of the informal system of equity network on stock price crash risk.Based on the external governance mechanism,this thesis analyzes the impact of the common shareholders’ equity network on the stock price collapse from the unique perspective of shared shareholders.It is found that common ownership can reduce the risk of stock price crash by improving governance efficiency and information disclosure efficiency,which further enriches the research on the influencing factors of stock price crash risk.(3)This thesis enriches the study of the heterogeneity of common shareholders.This thesis analyzes the identity of co-shareholders in depth,and divides them into multiple categories such as individual investors,corporate investors,insurance institutional investors,and public fund investors,and finds that institutional co-shareholders and public fund co-shareholders have a more significant impact on reducing the risk of stock price collapse.Further research on the influence of different types of coshareholders on corporate behavior,deepen the understanding and understanding of the relationship between the characteristics of equity entities and the risk of stock price collapse,and make useful additions to the current literature.