Research on the risk contagion effect of stock price collapse under the venture capital network

HU Lei, ZHANG Jiahao, DU Kerui

Systems Engineering - Theory & Practice ›› 2023, Vol. 43 ›› Issue (12) : 3441-3460.

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Systems Engineering - Theory & Practice ›› 2023, Vol. 43 ›› Issue (12) : 3441-3460. DOI: 10.12011/SETP2023-0507

Research on the risk contagion effect of stock price collapse under the venture capital network

  • HU Lei1, ZHANG Jiahao1, DU Kerui2
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Abstract

Based on the data of China's A-share listed companies from 2009 to 2021, the contagion effect of stock price crash risk in venture capital network is investigated. The study found that the risk of stock price crash is more likely to occur when the firm has a common venture capital connection with the company at risk of stock price crash. Mechanism analysis shows that the risk of stock price crash in venture capital network is mainly transmitted through affecting the quality of information disclosure and the principal-agent relationship. Further analysis shows that network location negatively moderates the contagion effect of stock price crash risk, and the contagion effect is stronger in companies that are state-owned, have low level of internal control, do not employ Big Four accounting firms and have high analyst attention. The research expands the research scope of "contagion" in venture capital network and provides new ideas for reducing stock price crash risk and contagion effect.

Key words

venture capital network / stock price crash risk / risk contagion

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HU Lei , ZHANG Jiahao , DU Kerui. Research on the risk contagion effect of stock price collapse under the venture capital network. Systems Engineering - Theory & Practice, 2023, 43(12): 3441-3460 https://doi.org/10.12011/SETP2023-0507

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Funding

Youth Program of National Natural Science Foundation of China (71903055); Youth Project of Hunan Provincial Natural Science Foundation (2023JJ40243); Excellent Youth Foundation of Educational Commission of Hunan Province (19B322)
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