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How Does Debt Structure Influence Stock Price Crash Risk?

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Abstract

This paper uses the financial data of Chinese listed firms to explore the relationship between the debt structure, which is measured as the ratio of trade credit to bank loan, and future stock price crash risk. The empirical results show that the ratio of trade credit to bank loan is positively associated with the firm-specific crash risk while a good institutional environment reduces this positive relationship. In addition, considering the firm’s ownership type, the authors find that the positive relationship between the debt structure and crash risk is more significant in the SOEs.

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Authors and Affiliations

  1. School of Economics and Management, BeiHang University, Beijing, 100091, China

    Zichao Jia, Lu Deng & Ruiyang Xu

Authors
  1. Zichao Jia
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  2. Lu Deng
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  3. Ruiyang Xu
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Corresponding author

Correspondence to Lu Deng.

Additional information

This research was supported by the National Natural Science Foundation of China under Grant No. 71572007, the Humanities and Social Sciences Project of Ministry of Education under Grant No. 15YJC630042.

This paper was recommended for publication by Editor WANG Shouyang.

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Jia, Z., Deng, L. & Xu, R. How Does Debt Structure Influence Stock Price Crash Risk?. J Syst Sci Complex 31, 473–492 (2018). https://doi.org/10.1007/s11424-016-6105-1

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  • DOI: https://doi.org/10.1007/s11424-016-6105-1

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