Managerial Myopia And Stock Price Crash Risk

In the course of transitioning from high-speed to high-quality development,the stable operation of the capital market is a necessary component of achieving steady progress in economy.Focusing on long-term development strategies is an useful way for companies to build competitive barriers and refine core competencies,as well as a critical cornerstone for maintaining the healthy operation of the capital market.Numerous studies have shown that managers’ traits can influence their behavioral preferences,which can affect a company’s business decisions.As one of the important traits of managers,their perspectives can impact a company’s development strategy,but not all managers have a long-term perspective.In recent years,negative events caused by managerial myopia has occurred frequently,causing certain impacts on the stability of the capital market and investor confidence.However,there is still insufficient discussion on the impact of managerial myopia on a company’s decisions.This article takes China’s listed companies in Shanghai and Shenzhen Stock Exchanges from 2005 to 2021 as research sample.This article investigates the relationship between managerial myopia and the stock price crash risk,and further tests the mechanism.The result shows that: firstly,managerial myopia will significantly increase the stock price crash risk,and the conclusion still exists after the robustness test.Secondly,the mechanism test shows that short-sighted managers,driven by immediate interests,may use their personal authority to adjust the performance forecast disclosure or engage in real earnings management,which sacrifices long-term company earnings,thereby increasing the degree of information asymmetry and the stock price crash risk.Thirdly,in the cross-sectional analysis of the information environment,high media attention and audit quality optimize the information environment,causing the relationship between managerial myopia and stock price crash risk to be restrained.In the cross-sectional analysis of managerial motivation,it is found that when managers have high shareholding ratio,high investor sentiment,and stable institutional investors the relationship between managerial myopia and stock price crash risk is restrained.In the cross-sectional analysis of supervisory factors,multiple large shareholders will make the relationship between managerial myopia and stock price crash risk to be restrained.The conclusion of this paper is helpful in understanding the economic consequences of managers’ traits and influencing factors of stock price crash risk.It can also contribute to the enterprise getting a better understanding of managerial myopia and restraining the potential adverse effects of managerial myopia.