While prior research identifies various firm-level determinants of stock price crash risk, the influence of creditor protection remains underexplored. Exploiting the staggered adoption of U.S. anti-recharacterization (AR) laws as a quasi-natural experiment, we find that crash risk declines following the enactment of these laws. Strengthened creditor rights appear to expand firms’ debt capacity and constrain managers’ ability and incentives to conceal adverse information. We provide direct evidence of the bad-news-hoarding mechanism: AR law adoption is followed by a stronger stock-market response to negative earnings surprises and a reduction in residual short interest, both indicating timelier revelation of bad news. The mitigating effect is most pronounced among firms that are financially constrained, use securitization-related financing more extensively, operate under weaker corporate governance, and exhibit greater information asymmetry. These patterns are consistent with an information channel in which stronger creditor rights curb managers’ bad-news hoarding and improve the firm’s information environment. Our findings show that creditor protection reforms can enhance equity-market stability by aligning managerial disclosure incentives. We interpret the evidence as consistent with complementary disclosure-incentive and creditor-monitoring channels.