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| Diversified Operations and Corporate Stock Price Crash Risk |
| XU Yekun，CHEN Shishuo， MA Guangyuan |
| Liaoning University, Shenyang, China |
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Abstract Taking listed companies from 2007 to 2017 as the sample, this studyinvestigates the relationship between corporate diversification and stock price crash risk. The results suggest that diversified operations could aggravate rather than diversify stock price crash risk even if diversification can decrease operational risk, especially for enterprises implementing unrelated diversification strategies. The results of channel tests show that information opacity and tax avoidance play partial mediating roles in the relation. Moreover, the positive relation is more significant for state-owned enterprise, for enterprises with non-Big4 auditors or higher institutional shareholders’ shareholdings. In addition, for enterprises located in regions with lower marketization, where the industry supported by industrial policy or confronted with lower economic policy uncertainty, diversification is more likely to aggravate corporate crash risk.
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Received: 16 September 2019
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