Stock price crash risk brought about by drastic stock price fluctuations has become a hot topic of concern in both academic and practical circles, and scholars have explored the internal and external governance mechanisms of stock price crash risk from different perspectives. The exchange network interactive platform is a new communication model built by the Stock Exchange based on two-way interaction between investors and listed companies. Since the operation of the platform, this face-to-face communication method has received widespread attention and participation, while prior literature has not examined the information content and implementation effect of such interactive disclosure. Based on the unique policy context in the Chinese capital market, this paper uses the platform as an entry point to verify whether there is a governance role for network platform interaction from the perspective of stock price crash risk. Using the A-share listed companies on the main board in Shanghai and Shenzhen Stock Exchanges in 2010-2020 as the sample, this paper explores the effect of exchange network platform interaction on the stock price crash risk. We find that the interaction between listed companies and investors through the exchange network platform can significantly inhibit the stock price crash risk, and the governance role of information channels is the mechanism. The negative relationship is more pronounced when the quality of management responses is higher, as evidenced by more timely responses and a higher average number of words. Further analysis suggests that the effect of network platform interaction on the stock price crash risk is more negative by decreasing analyst, media and auditor attention, which suggests that network platform interaction can have the complementary governance effect of traditional external intermediaries. The disclosure of management risk information and competitive culture information can also mitigate the stock price crash risk, validating the convergent view of risk information disclosure and the supervisory governance role of competitive culture. From the perspective of mitigating the stock price crash risk, this paper verifies the governance role played by exchange network platform interaction. In other words, informal systems such as exchange network platform interaction can provide new path support for the mitigation of stock price crash risk. The findings provide guiding significance for promoting the healthy development of China’s financial industry and deepening financial reform, and provide a “foothold” for promoting the capital market efficiency and the transformation of information disclosure regulation.
Can Exchange Network Platform Interaction Mitigate Stock Price Crash Risk? Based on the Heterogeneity of Management Response Quality
Journal of Shanghai University of Finance and Economics Vol. 24, Issue 03, pp. 92 - 107 (2022) DOI:10.16538/j.cnki.jsufe.2022.03.007
Cite this article
Chen Hua, Sun Han, Shen Yinhong. Can Exchange Network Platform Interaction Mitigate Stock Price Crash Risk? Based on the Heterogeneity of Management Response Quality[J]. Journal of Shanghai University of Finance and Economics, 2022, 24(3): 92-107.