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An Empirical Investigation of Multinationality and Stock Price Crash Risk for MNCs in China
,
Elmina Homapour ,
Fabio Caraffini ,
Francisco Chiclana
Mathematics, Volume: 10, Issue: 19, Start page: 3464
Swansea University Author:
Fabio Caraffini
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DOI (Published version): 10.3390/math10193464
Abstract
There is a large volume of literature in international business on multinationality. There is an equally large volume of literature in finance on stock price crash risk. However, very few studies have attempted to provide a link between these two research areas. Using an unbalanced panel data consis...
| Published in: | Mathematics |
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| ISSN: | 2227-7390 |
| Published: |
MDPI AG
2022
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| Online Access: |
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| URI: | https://cronfa.swan.ac.uk/Record/cronfa61281 |
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| Abstract: |
There is a large volume of literature in international business on multinationality. There is an equally large volume of literature in finance on stock price crash risk. However, very few studies have attempted to provide a link between these two research areas. Using an unbalanced panel data consisting of 473 multinational corporations (MNCs) publicly listed in the Chinese stock markets during 2004 to 2020, this paper is one of the first to empirically investigate whether and to what extent multinationality affects stock price crash risk. The paper finds strong evidence that multinational operation is negatively related to stock price crash risk. In addition, MNCs with better corporate governance quality experience larger decline in stock price crash risk when the degree of multinationality increases. Furthermore, MNCs with higher stock market liquidity experience lower crash risk. An important implication is that companies should strengthen their corporate governance and market liquidity while “going global”. |
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| Keywords: |
multinational corporations (MNCs); stock price crash risk; multinationality; Chinese stock markets |
| College: |
Faculty of Science and Engineering |
| Funders: |
This research received no external funding. |
| Issue: |
19 |
| Start Page: |
3464 |