Document Type
Article
Publication Date
2024
DOI
10.3390/ijfs12020047
Publication Title
International Journal of Financial Studies
Volume
12
Issue
2
Pages
47 (1-17)
Abstract
Despite the recent proliferation of research on internationalization, little attention has been paid to understanding the reasons behind the decrease in firm value accompanying international expansion. By delving into the underlying mechanisms and applying the concept of agency theory to a sample of US firms spanning from 2000 to 2022, we posit that an increased level of information asymmetry in internationally diversified firms incentivizes managers to prioritize their own interests. To protect their careers, CEOs of internationally diversified firms often suppress bad news. This behavior can lead to the accumulation of negative news and heighten the risk of a stock-price crash. Furthermore, we propose that higher levels of international experience, enhanced monitoring effectiveness, and efficient investment practices will negatively moderate the positive relationship between internationalization and stock-price crash risk.
Rights
© 2024 by the authors.
This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution 4.0 International (CC BY 4.0) License.
ORCID
0009-0003-2210-7693 (Askarzadeh), 0009-0008-2984-5898 (Amiri)
Original Publication Citation
Askarzadeh, A., Kanaanitorshizi, M., Tabarhosseini, M., & Amiri, D. (2024). International diversification and stock-price crash risk. International Journal of Financial Studies, 12(2), 1-17, Article 47. https://doi.org/10.3390/ijfs12020047
Repository Citation
Askarzadeh, Alireza; Kanaanitorshizi, Mostafa; Tabarhosseini, Maryam; and Amiri, Dana, "International Diversification and Stock-Price Crash Risk" (2024). Finance Faculty Publications. 43.
https://digitalcommons.odu.edu/finance_facpubs/43
Included in
Corporate Finance Commons, International Business Commons, Management Sciences and Quantitative Methods Commons