The effect of Agency Problems on Relationship between Institutional Investor's Short-Term Time Horizon and Stock Price Crash Risk

Document Type : Original Article

Authors

1 Assistant Prof, Department of Accounting, Hashtrood Branch, Islamic Azad University, East Azerbaijan Province, Iran.

2 MSc in Accounting, Marand Branch, Islamic Azad University, East Azerbaijan Province, Iran.

Abstract

The purpose of this study is to investigate the effect of agency problems on relationship between Institutional investor's short-term time horizon and stock price crash risk. This research is applied in terms of purpose and correlation in terms of method. The research period was 2012-2019 and data from two months before 2011 and two months after 2020 were used to measuring the risk of stock price fall. Also, 123 companies were selected as a sample. To analyze the research data, multivariate regression models have been used in Eviews software. The results of this study showed that investor's short-term time horizon has a positive and significant effect on the stock price crash risk. Agency problems (problems due to agency conflict based on managerial ownership) have a negative and significant effect on the relationship between investor's short-term horizon and the stock price crash risk. Agency problems (problems due to agency conflict based on free cash flow) have a positive and significant effect on the relationship between investor's short-term time horizon and the stock price crash risk.

Keywords

References

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Financial Management Perspective
Volume 11, Issue 34
September 2021
Pages 117-144

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