Qualified Foreign Institutional Investor ownership and stock price crash risk: Monitoring or short-termism?
Feng Xiea1, Jing Chia, Jing Liaoa
Abstract
This study investigates the role of Qualified Foreign Institutional Investor (QFII) ownership on stock price crash risk in China from 2003 to 2015. We provide evidence that QFII ownership reduces stock price crash risk in the state-owned firms, and increase stock price crash risk in the private firms due to their investment strategies. In addition, we find that the state-owned firms with longer QFIIs investment period and more QFIIs have lower future crash risk, which is consistent with the monitoring theory. Our findings are robust to alternative empirical specifications and endogeneity concerns.
a All authors are from the School of Economics and Finance, Massey University, New Zealand.
1 Corresponding Author: Feng Xie. School of Economics and Finance, Massey University (Manawatu Campus), Private Bag 11-222, Palmerston North 4442, New Zealand, Tel: +64-6-3505799 ext. 83554; Email:
