Monitoring or tunneling? Information interaction among large shareholders and the crash risk of the stock price

Based on A-share-listed companies on the Chinese stock market, we investigate the impact of information interaction among large shareholders (IILS) on stock price crash risk. We find that IILS is negatively correlated with crash risk. This finding is robust to include other crash risk determinants identified in the literature. The results of the influencing mechanism analysis show that IILS influences crash risk through the "monitoring effect" rather than the "tunneling effect". Moreover, the above results remain valid after considering possible endogenous problems. Finally, we verify the existence of private information interaction in the coshareholding network.