주가급락이 미래 비정상투자 수준에 미치는 영향

[Purpose] This study examines whether firms experiencing a stock price crash lower abnormal investment. Abnormal investment is known to be one of the managers’ negative decisions leading to a stock price crash. If the capital market can effectively monitor managerial agency problems, managers would refrain from making overinvestment decisions. [Methodology] This study constructed a sample of 10,220 firm－year observations listed on the Korean Stock Exchange (KSE) between 2003 and 2021. Using variables for abnormal investment and stock price crashes estimated through two different models, we conducted a regression analysis. [Findings] First, firms experiencing a stock price crash exhibited lower levels of abnormal investment in subsequent periods than firms that did not experience a crash. This result means stock price crashes help managers refrain from making overinvestment decisions. Second, we also find the same result as above when excluding the financial crisis period, which means our results are robust. Third, stock price crashes in the current period did not affect abnormal investments two periods later. It indicates that the tendency for managers to refrain from abnormal investment weakens in the long run. [Implications] This study demonstrates that capital markets can mitigate managers’ agency problems. Managers generally act in their self－interest during the decision－making process, exhibiting agency problems. However, our findings suggest that the reaction of capital markets can alleviate conflicts of interest between shareholders and managers.