Bank monitoring and stock price crash risk: Evidence from China
Bank monitoring and stock price crash risk: Evidence from China
This paper documents the negative relation between credit line and stock price crash risk in a weak-efficiency and bank dominated environment like China. Using data from china’s A-share listed firms, we find a significant negative relationship exists between credit line and stock price crash risk. The underlying mechanism analysis demonstrates that the bank monitoring of management, major shareholder’s tunneling activities, and financial constraints are the underlying mechanism. In heterogeneous