Business strategy, overvalued equities, and stock price crash risk
This paper examines empirically the effect of firm-level business strategies on future stock price crash risk, and the extent to which equity overvaluation moderates this relation. By exploring the extent to which firms following particular business strategies are more or less likely to experience c...
| Main Authors: | , |
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| Format: | Journal Article |
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J A I Press
2017
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| Online Access: | http://hdl.handle.net/20.500.11937/48055 |
| _version_ | 1848758004833320960 |
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| author | Habib, A. Hasan, Mostafa |
| author_facet | Habib, A. Hasan, Mostafa |
| author_sort | Habib, A. |
| building | Curtin Institutional Repository |
| collection | Online Access |
| description | This paper examines empirically the effect of firm-level business strategies on future stock price crash risk, and the extent to which equity overvaluation moderates this relation. By exploring the extent to which firms following particular business strategies are more or less likely to experience crash risk, we provide evidence that increases our understanding of the underlying determinants of crash risk. Using a composite strategy score developed by Bentley, Omer and Sharp (2013) and applying two variants of crash risk, we document that firms following innovative business strategies (prospectors) are more prone to future crash risk than defenders. We also find that prospectors are more prone to equity overvaluation which, in turn, increases future crash risk. |
| first_indexed | 2025-11-14T09:37:06Z |
| format | Journal Article |
| id | curtin-20.500.11937-48055 |
| institution | Curtin University Malaysia |
| institution_category | Local University |
| last_indexed | 2025-11-14T09:37:06Z |
| publishDate | 2017 |
| publisher | J A I Press |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | curtin-20.500.11937-480552017-09-13T14:19:38Z Business strategy, overvalued equities, and stock price crash risk Habib, A. Hasan, Mostafa This paper examines empirically the effect of firm-level business strategies on future stock price crash risk, and the extent to which equity overvaluation moderates this relation. By exploring the extent to which firms following particular business strategies are more or less likely to experience crash risk, we provide evidence that increases our understanding of the underlying determinants of crash risk. Using a composite strategy score developed by Bentley, Omer and Sharp (2013) and applying two variants of crash risk, we document that firms following innovative business strategies (prospectors) are more prone to future crash risk than defenders. We also find that prospectors are more prone to equity overvaluation which, in turn, increases future crash risk. 2017 Journal Article http://hdl.handle.net/20.500.11937/48055 10.1016/j.ribaf.2016.09.011 J A I Press restricted |
| spellingShingle | Habib, A. Hasan, Mostafa Business strategy, overvalued equities, and stock price crash risk |
| title | Business strategy, overvalued equities, and stock price crash risk |
| title_full | Business strategy, overvalued equities, and stock price crash risk |
| title_fullStr | Business strategy, overvalued equities, and stock price crash risk |
| title_full_unstemmed | Business strategy, overvalued equities, and stock price crash risk |
| title_short | Business strategy, overvalued equities, and stock price crash risk |
| title_sort | business strategy, overvalued equities, and stock price crash risk |
| url | http://hdl.handle.net/20.500.11937/48055 |