Power Distance, Political Uncertainty, and Stock Price Crash Risk: International Evidence
研究了37个国家2004-2016年数据，发现社会权力距离影响企业信息披露时机，高权力距离国家在选举期间股价崩盘风险降低，但选举后风险上升。
This study tests the effect of unbalanced power distance (PD) (i.e., Hofstede’s cultural dimensions PD index) and individual stock price crash risk. We examine the stock price behavior of listed firms in 37 countries from 2004 to 2016 and use multivariate analyses to document that societal PD is important in explaining firms’ propensity to release accounting information. This propensity suggests a psychological tendency regarding timing management, particularly for bad news. As countries with large PD prefer to keep things under control, the result is fewer unexpected stock price crashes during the long windows between election events. However, because large-PD countries focus their markets on maintaining temporary peace before and during periods of political events (i.e., national elections), crash risk increases after the political event window. Consistent with these predictions, we find that in large-PD countries, companies generally have less incentive to hide negative information and thus generate stock price crashes. This situation is substantially changed during the postpolitical windows, when firms and ways of spreading information are more controlled by the government. Our findings suggest that formal mechanisms alone are insufficient to explain the behaviors of corporate disclosure that are entangled with informal instruments.