CUFE-BS Academic Seminar: Key Talent Outflow and Stock Price Crash Evidence from the Rejection of the Inevitable Disclosure Doctrine

Time: 14:00-16:00 PM, 26 November 2020

Location: Room 615, CUFE Business School

Speaker: Dr. Liu Xin

Dr. Liu Xin is an Assistant Professor of Hanqing Institute of economics and finance, Renmin University of China.Dr. Liu Xin holds a bachelor's degree from Tsinghua University and a doctor's degree from the University of Hong Kong. From 2018 to 2020, he taught at the school of management, University of bath, UK. Since 2020, he has been teaching in the Institute of Han Qing Institute of economics and finance, Renmin University of China. He has taught financial methodology, empirical asset pricing and other courses for master and doctoral students. His research interests include empirical asset pricing and behavioral finance. And published in Journal of finance. He was invited to review manuscripts for journals such as journal of banking and finance, Journal of imperial finance, the financial review, the British Accounting Review, etc.

Abstract:

We document that an increase in the likelihood of key talent outflow leads to a higher stock price crash risk. Our test exploits US state courts’ staggered rejections of the inevitable disclosure doctrine (IDD), which improves the ability for key talents to switch jobs. We find that firms experience a significant increase in stock price crash risk after their headquartered states reject the IDD, relative to unaffected firms. This effect is stronger for firms facing fierce industry competition and relying heavily on human capital. Overall, our results suggest that the risk of losing key talents is an important determinant for stock price crash risk.