Institutional investors’ information seeking and stock price crash risk: nonlinear relationship based on management’s opportunistic behaviour

Abstract

Abstract This paper examines the influence of management’s opportunistic behaviour on the relationship between institutional investors’ visits and stock price crash risk. We find that the relationship between visit frequency and stock price crash risk is inverted U‐shaped because of management’s opportunistic behaviour aiming at avoiding the negative impacts of visit. Institutional investors’ visits raise stock price crash risk when visit frequency is low and it can reduce crash risk just when visit frequency is high enough. This nonlinear relationship is more significant when management’s opportunistic behaviour is highly motivated and the implementation space is larger.

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