Transformations  in
Business & Economics

MANAGERIAL CONFIDENCE, MEDIA ATTENTION, AND STOCK PRICE CRASH RISK⁵
Ruchuan Jiang, Yunge Han, Zhiguo Chen, Xinrui Lin

ABSTRACT. The market value of listed companies is incarnated in stock price, which is exceptionally significant to listed companies. Stock price crash directly devours the interests of enterprise investors and seriously impedes the smooth development of the capital market. To explore the causes for stock price crash and determine the corresponding governance mechanism, the 2010-2019 data of Chinese listed enterprises were utilized to measure the stock price crash risk with a negative coefficient of skewness (NCSKEW) and down-to-up volatility (DUVOL). Next, the influence of managerial confidence level on the stock price crash risk of enterprises was empirically tested, and the moderating effect of media attention was further analysed. Results show that managerial overconfidence significantly aggravates stock price crash risk. Media attention, which serves as the external information supervision mechanism of enterprises, weakens the significant positive correlation between managerial confidence level and stock price crash risk. This study explores the causes for the stock price crash from the perspective of behavioural finance and further perfects the studies on stock price crash risk. Meanwhile, the conclusions obtained from this study can provide a beneficial reference for media attention to exert the external supervisory effects of enterprises and the capital market.

KEYWORDS: managerial confidence, behavioural finance, stock price crash, corporate governance.

JEL classification:  Q23, Q28, I31, O12, C3.

⁵Acknowledgments: This study was supported by the Colleges and Universities Talent Introduction Program in Shandong Province of China.