Influence of firm crisis self-disclosure on stock reaction: Empirical research based on 220 safety accident announcements of Chinese A-share listed firms

doi:10.3969/j.issn.0253-2778.2020.08.001

Abstract

Abstract: Based on signal theory and situational crisis communication theory, the abnormal return rate and cumulative abnormal return rate of stocks were calculated by event study method, and the negative reaction process of stocks before and after firm crisis accident was verified. Here 220 safety accident announcements of Chinese A-share listed firms from 2007 to 2018 were collected and quantified as samples. In addition, based on stakeholders’ perception of environmental uncertainty, the multi-regression method was used to explore the process of stakeholders’ response to the self-disclosure of firm crisis. The empirical results show that within a short period after the announcement, stakeholders are more concerned about the loss of personnel, property damage and the response speed of firms. But after a long time, the negative stock reaction to the future uncertainty is stronger. Therefore, the sequence of stakeholders’ response to the self-disclosure of firm crisis is from influence uncertainty, response uncertainty to state uncertainty. The conclusion helps firms to make better use of crisis response strategies to reduce the damage and improve the ability of crisis communication.

Key words: accident announcements, stock reaction, event study, environmental uncertainty

CLC Number:

F270.3

WEI Wenzhe, ZHOU Lei, WEI Jiuchang. Influence of firm crisis self-disclosure on stock reaction: Empirical research based on 220 safety accident announcements of Chinese A-share listed firms[J]. Journal of University of Science and Technology of China, 2020, 50(8): 1035-1047.

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