Financial Management Perspective

Financial Management Perspective

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
rahim bonabi gadim 1
Somayeh Rahmani Fard 2
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.
10.52547/jfmp.11.34.117
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
Stock Price Crash Risk
Short-term Time Horizon
Institutional Investor
Agency Problems
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Financial Management Perspective
Volume 11, Issue 34
Summer 2021
Pages 117-144