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

LARRY SU, Elmina Homapour, Fabio Caraffini, Francisco Chiciana

Research output: Contribution to journalArticle (journal)peer-review

1 Citation (Scopus)
14 Downloads (Pure)

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”.
Original languageEnglish
Article number3464
Pages (from-to)1-12
JournalMathematics
Volume10
Issue number19
DOIs
Publication statusPublished - 23 Sept 2022

Keywords

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

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