Investigating the moderating effect of managerial ownership on the relationship between product market competition and stock price risk in companies listed on the Tehran Stock Exchange

Abstract

The main objective of the present study is to investigate product market competition and stock price crash risk: the role of management ownership among companies listed on the Tehran Stock Exchange. For this purpose, following Ben Karim et al. (2022), the relationship between product market competition (Herfindahl-Hirschman index) and stock price crash risk (negative skewness indices and stock return volatility) of companies was first examined, and then the moderating effect of management ownership on this relationship was analyzed. In addition, the effects of the variables of stock return standard deviation, stock return, company size, market-to-book value, profitability, and discretionary accruals were controlled in regression models. The present study is classified as a descriptive-post-event study in terms of its applied purpose and data collection method. The statistical population of the present study is all companies listed on the Tehran Stock Exchange in the six-year period between 2016 and 2017, which, based on the systematic exclusion sampling method, 156 companies and a total of 936 company-years were considered as a statistical sample. The present study is classified as a descriptive-ex post-event research in terms of its applied purpose and data collection method. Multivariate regression models using Eviews8 software and pooled data method were used to examine the hypotheses. The results obtained in this study show that firstly, there is a significant relationship between product market competition and the risk of a company's stock price crash, and secondly, management ownership has a moderating effect on the relationship between product market competition and the risk of a company's stock price crash.