An Empirical Investigation of Multinationality and Stock Price Crash Risk for MNCs in China

Date

2022-09-23

Advisors

Journal Title

Journal ISSN

ISSN

Volume Title

Publisher

MDPI

Type

Article

Peer reviewed

Yes

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”.

Description

open access article

Keywords

multinational corporations (MNCs), stock price crash risk, multinationality, Chinese stock markets

Citation

Su, L., Homapour, E., Caraffini, F. and Chiclana, F. (2022) An Empirical Investigation of Multinationality and Stock Price Crash Risk for MNCs in China. Mathematics, 10 (19), 3464

Rights

Research Institute