The Effect of Firm-Specific Environmental Punishment on Stock Price Crash Risk: Evidence From China-Reference-Cited by-同舟云学术

The Effect of Firm-Specific Environmental Punishment on Stock Price Crash Risk: Evidence From China

Published:2023-10 Issue:4 Volume:13 Page:
ISSN:2158-2440
Container-title:SAGE Open
language:en
Short-container-title:SAGE Open

Author:

Li Minghui¹,Shen Chaohai¹^ORCID,Wen Mengyao²³

Affiliation:

1. School of Economics and Management, East China Normal University, Shanghai, China

2. Postdoctoral Station of China Foreign Exchange Trade System, Shanghai, China

3. Fudan University, Shanghai, China

Abstract

Even though previous studies have investigated the effect of environmental regulation policy on stock price crash risk, little is known about how the firm-specific environmental punishment would impact stock price crash risks. By applying difference-in-difference method with manually collected firm-specific environmental punishment data for the listed firms in China, our study finds that the implemented environmental punishment leads to larger stock price crash risk accumulation of the punished firms. This effect can be mitigated by better information disclosure behavior, higher media reputation, healthy fundamentals, and optimal capital structure. Our study also finds the consecutive punishment effect only exists in a long period. Our work is among the first to rigorously analyze the effect of firm-specific environmental punishment on firm’s stock price crash risk. This research provides relevant policy suggestions on the environmental punishment practice.

Funder

National Natural Science Foundation of China

Shanghai Municipal Foundation for Philosophy and Social Science

Pujiang Talent Program

China Postdoctoral Science Foundation

Shanghai M&A Financial Research Institute Science Foundation

Publisher

SAGE Publications

Subject

General Social Sciences,General Arts and Humanities

Link

http://journals.sagepub.com/doi/pdf/10.1177/21582440231199871

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