The impact of trade policy uncertainty on stock price crash risk of listed tourism companies: evidence from China

Abstract

This paper examines the effects of Trade Policy Uncertainty (TPU) on the listed tourism companies' stock price crash risk. The paper addresses a potential endogeneity bias and finds that the TPU increases the stock price crash risk of the listed tourism firms within a sample of A-share listed tourism firms in China from 2002 to 2020. Besides, the influence of the TPU is more prominent in state-owned enterprises and companies with high analyst attention. It is also observed that improving internal governance mitigates the positive impact of the TPU on the stock price crash risk of listed tourism companies. Finally, it is found that the TPU increases the formation of bad company news and the hoarding of negative management news, thus increasing the risk of listed tourism companies' stock price crashes. Possible implications of bad news formation and hoarding are also discussed.