This study investigates the effect of corporate derivatives usage on stock price crash risk. We test two competing hypotheses. Under the transparency hypothesis, derivatives usage reduces information opacity and lowers crash risk. Under the speculation hypothesis, derivatives usage exacerbates managerial short-termism and increases crash risk. We find evidence supporting the transparency hypothesis. This result is robust to sensitivity checks including a two-stage treatment model, difference-in-differences test, and subsample analysis. We further show that curbing bad news hoarding, curtailing overinvestment, and increasing breadth of ownership are potential channels through which derivatives usage mitigates crash risk. Additional tests on the effect of derivatives usage on likelihood of securities class-action litigation provide consistent results.

本研究调查了公司衍生品的使用对股价崩盘风险的影响。我们检验两个相互竞争的假设。在透明度假说下，衍生品的使用降低了信息不透明度并降低了崩盘风险。在投机假设下，衍生品的使用加剧了管理层的短期主义并增加了崩盘风险。我们找到了支持透明度假设的证据。该结果对于包括两阶段处理模型、差分检验和子样本分析在内的敏感性检查是稳健的。我们进一步表明，遏制坏消息囤积、减少过度投资和增加所有权范围是衍生品使用减轻崩盘风险的潜在渠道。对衍生工具的使用对证券集体诉讼可能性的影响的额外测试提供了一致的结果。