Do overpaid dividends drive stock price crash risk?

We explore the impact of overpaid dividends on future stock price crash risk. Using a dataset of 2,662 firms with 15,416 firm-year observations of China’s A-share listed firms, our result indicates that overpaid dividends are positively related to the likelihood of future stock price crash risk. The results further suggest that high-quality corporate governance and financial analyst coverage can moderate the positive effect of overpaid dividends on the crash risk. Moreover, continuous overpaid dividends and state-owned enterprises with overpaid dividends have a stronger impact on the crash risk, and overpaid dividends are significantly affected by their peer firms.