Private Equity Funds, Institutional Environment and Stock Price Crash Risk

Abstract

Abstract:

This paper selects GEM listed companies in China from 2010 to 2016 as sample to study the impact of private equity investment on stock price crash risk. Furthermore, we test whether this relationship is different among different institutional environments. The results show that of companies with private equity investment face significantly lower stock price crash risk than companies without private equity investment, and the higher proportion private equity investment makes up in a company, the less likely the company is to suffer stock price crash risk. So far as the source of private equity investment is concerned, the private equity investment from foreign capital or state-owned enterprises can reduce the stock price crash risk more significantly. Further study finds that in private equity investment and institutional environment play an inter-complementary role in reducing the risk of stock price crash. Therefore, this paper enriches the research literature on the corporate governance effect of private equity investment and has certain reference significance for enterprises and policy makers.

Key words: private equity funds, stock price crash risk, the institutional environment

Wang Jingjing, Liu Pei. Private Equity Funds, Institutional Environment and Stock Price Crash Risk[J]. , 2020, 32(2): 63-75.

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