Institutional cross-ownership and stock price crash risk

Using manually collected data of Chinese listed firms during the period 2007-2018, we provide strong and robust evidence that institutional cross-ownership is negatively associated with firm -specific stock price crash risk. Building on China's institutional settings, we document that the negative relation is more pronounced for firms located in provinces with higher political un-certainty, or state-owned enterprises. This paper also conducts several mechanisms analyses and has confirmed three potential influencing mechanisms, such as information advantage, gover-nance improvement and anticompetitive incentives, in explaining the effect of institutional cross -ownership on stock price crash risk. Overall, this paper develops a new perspective to investigate the ways to alleviate stock price crash risk in emerging markets.