Institutional Ownership, Media Sentiment and Stock Price Crash Risk in China

China's stock market is known for its immature and irrational characteristics because there are difficulties in efficiently allocating resources.In China, there is a notably high risk of a sudden and severe decrease in stock values, which has been noticed as a stock price crash risk.Unlike Western markets, individual investors dominate China's stock market, and these investors often exhibit irrational and emotional trading habits, which have further increased the stock price's volatility.To maintain stability in the market, the Chinese government has been actively encouraging institutional ownership.The strategy is essential for improving market stability, reducing price fluctuations, and lowering the risk of stock price crashes.However, correlational studies suggest that institutional ownership may increase the risk of stock price crashes.Primarily, the long-term accumulation and concealment of negative information frequently contribute to the likelihood of a crash in stock prices.Many scholars maintain that media monitoring mechanisms can reduce the risk of stock market collapse.Furthermore, researchers emphasize the importance of external monitoring and responding to the revelation of inaccurate information.Many studies focus on the pivotal role of media sentiment in overseeing management and addressing issues related to agency difficulties.This underscores the importance of this study in understanding the dynamics of external monitoring in China.This study examines data from China's list of companies from 2011 to 2021.It employs the information cascade theory to examine the impact of institutional ownership on China's stock market, as well as the moderate effect of board characteristics on the correlation between institutional ownership and the probability of stock price crashes.Additionally, it investigates the influence of media sentiment as a moderating factor.