How Does Debt Structure Influence Stock Price Crash Risk?

This paper uses the financial data of Chinese listed firms to explore the relationship between the debt structure, which is measured as the ratio of trade credit to bank loan, and future stock price crash risk. The empirical results show that the ratio of trade credit to bank loan is positively associated with the firm-specific crash risk while a good institutional environment reduces this positive relationship. In addition, considering the firm’s ownership type, the authors find that the positive relationship between the debt structure and crash risk is more significant in the SOEs.