Financial Innovation,Fair Value Measurement And Stock Price Performance Of Commercial Banks

Financial innovation,especially financial product innovation,can increase intermediary business income of commercial banks,alleviate term mismatch,improve capital adequacy ratio,and play a role in dispersing financial risks of commercial banks.However,financial innovation is also a "double-edged sword",which also brings potential financial risks.The bankruptcy of Lehman Brothers and the major restructuring of Citibank in the 2008 financial crisis are closely related to the financial innovation of banks.So,what are the consequences of the financial innovation of our commercial banks? Financial innovation often needs to use Fair Value measurement to improve the ability of arbitrage and hedging.Does the publication and application of Fair Value standards make Fair Value measurement play its due role? The study of these problems is of great significance to promote the rational financial innovation of commercial banks in China,to effectively use Fair Value measurement,to prevent and resolve financial risks,and to ensure the sustainable development of commercial banks.Based on the theories of information asymmetry,principal-agent and signal transmission,this paper uses the data of 2007-2017 annual reports of Shanghai and Shenzhen A-share listed commercial banks and analyses the impact of financial innovation and Fair Value measurement on stock liquidity,stock price collapse risk and stock price synchronization of commercial banks.Besides,it also analyses the intermediary effect of Fair Value measurement on stock liquidity,stock price collapse risk and stock price synchronization of commercial banks.Finally,taking management power as a moderating variable,this paper studies the moderating effect of Fair Value measurement of management power on stock liquidity,stock price crash risk and stock price synchronization of commercial banks in financial innovation.The author finds that financial innovation reduces the stock liquidity when it reduces the risk of stock price crash and the synchronization of stock price of commercial banks;Fair Value measurement not only increases the stock liquidity of commercial banks,but also improves the risk and synchronization of stock price crash.It also plays a part of the intermediary effect as well.After introducing the related variables of management power into the model,we will do further research.We find that: on the whole,managerial power exerts the mediating effect of Fair Value measurement in financial innovation and stock performance of commercial banks,which is mainly reflected in the following aspects:(1)In the process of mediating effect between financial innovation and stock liquidity of commercial banks,the size of board of directors,senior title of general manager and general manager of managerial power are regulated by the mediating effect of Fair Value measurement in financial innovation and stock liquidity of commercial banks.Stock ownership does not regulate the direct path,the first half of the intermediary process and the second half of the process.The "two-position integration" of chairman and general manager regulates the direct path of financial innovation to stock liquidity and the first half of the intermediary process: "two-position integration" strengthens the negative correlation between financial innovation and stock liquidity,and weakens the positive correlation between financial innovation and Fair Value measurement.The tenure of general manager regulates the direct path of financial innovation to stock liquidity and the second half of the intermediary process.With the increase of tenure,the negative correlation between financial innovation and stock liquidity is strengthened,and the positive correlation between Fair Value measurement and stock liquidity is weakened.The general manager education background does not regulate the direct path of financial innovation to stock liquidity,but regulates the first half of the intermediary process: the general manager with high education will weaken the positive correlation between financial innovation and Fair Value measurement.The general manager's part-time job outside does not regulate the direct path of financial innovation to stock liquidity,but regulates the second half of the intermediary process: the general manager's part-time job outside weakens the positive correlation between Fair Value measurement and stock liquidity.Equity decentralization does not regulate the direct path of financial innovation to stock liquidity,but regulates the second half of theintermediary process: Equity decentralization strengthens the positive correlation between Fair Value measurement and stock liquidity.(2)In the process of adjusting the intermediary effect between financial innovation and the risk of stock price collapse of commercial banks,the size of board of directors,the length of service of general managers,the part-time job outside of general managers and the decentralization of stock rights have not regulated the direct path,the first half of intermediary process or the second half of intermediary process.The "two-in-one" approach of chairman and general manager does not regulate the direct path of financial innovation to the risk of stock price collapse,but it regulates the first half of the intermediary process: the "two-in-one" commercial bank weakens the positive correlation between financial innovation and Fair Value measurement.The title of general manager regulates the direct path of financial innovation to the risk of stock price crash.The senior title of general manager weakens the negative correlation between financial innovation and stock price crash risk,but it does not regulate the first and second half of the intermediary process.The general managers with high academic qualifications regulate the direct path of financial innovation to stock price crash risk: the general managers with high academic qualifications will weaken the negative correlation between financial innovation and stock price crash risk,and they have not regulated the first and second half of the intermediary process.General Manager Stock Ownership regulates the direct path of financial innovation to stock price collapse risk: General Manager Stock Ownership strengthens the negative correlation between financial innovation and stock price collapse risk,but it fails to regulate the first and second half of the intermediary process.(3)In the process of adjusting the intermediary effect between financial innovation and stock price synchronization of commercial banks,the management power does not regulate the direct path of financial innovation to stock price synchronization,nor does it regulate the first and second half of the intermediary process.The size of the board of directors regulates the direct path of financial innovation to stock price synchronization: with the expansion of the board of directors,the negative correlation between financialinnovation and stock price synchronization is weakened.The size of the board of directors has not adjusted the first half of the intermediary process or the second half of the intermediary process.The "two-position integration" regulates the direct path of financial innovation to stock price synchronization and the first half of the intermediary process: The "two-position integration" weakens the negative correlation between financial innovation and stock price synchronization and the positive correlation between financial innovation and Fair Value measurement.The senior title of general manager does not regulate the direct path of financial innovation to stock price synchronization,but it regulates the first and second half of the intermediary process: while weakening the positive correlation between financial innovation and Fair Value measurement,the general manager with senior title strengthens the positive correlation between Fair Value measurement and stock price synchronization.The tenure of the general manager does not regulate the direct path of financial innovation to stock price synchronization,but it regulates the second half of the intermediary process: with the extension of the tenure of the general manager,the positive correlation between Fair Value measurement and stock price synchronization will be strengthened.The general manager's education background does not regulate the direct path of financial innovation to stock price synchronization,but it regulates the first and second half of the intermediary process: while weakening the positive correlation between financial innovation and Fair Value measurement,the general manager with high education will strengthen the positive correlation between Fair Value measurement and stock price synchronization.The general manager's part-time job outside does not regulate the direct path of financial innovation to stock price synchronization,but it regulates the second half of the intermediary process: the general manager's part-time job outside weakens the positive correlation between Fair Value measurement and stock price synchronization.General Manager's shareholding regulates the direct path of financial innovation to stock price synchronization,but it does not regulate the first and second half of the intermediary process: General Manager's shareholding weakens the negative correlation between financialinnovation and stock price synchronization.The conclusions of this paper have the following theoretical significance or innovations:(1)A comprehensive and systematic study of the impact of financial innovation on stock liquidity,stock price crash risk and stock price synchronization of commercial banks enriches the research literature on the influencing factors of stock price performance of commercial banks;(2)A study of Fair Value measurement in the impact of financial innovation on stock liquidity,stock price crash risk and stock price synchronization is conducted.The intermediary effect of Fair Value measurement enriches the research literature on the impact of Fair Value measurement and deepens the understanding of the internal mechanism of financial innovation on the performance of the stock price market of commercial banks;(3)After studying the intermediary effect of Fair Value measurement on the performance of the stock price of commercial banks in financial innovation,management power is introduced into the model as a moderating variable to study the impartiality of management power.The moderating role of the intermediary effect of value measurement enriches the research on the consequences of management power and deepens the understanding of the mechanism of the intermediary effect of Fair Value measurement.Based on the conclusions of the study,this paper puts forward the following policy recommendations:(1)Financial innovation can help to reduce the risk of stock price crash,the synchronization of stock price and the liquidity of stock.Under the current background of encouraging innovation and preventing and defusing major financial risks,it is beneficial to cultivate a healthy capital market.Therefore,we should vigorously promote financial innovation.(2)Financial innovation will increase the scope of Fair Value measurement in general.Fair Value measurement can increase stock liquidity,activate capital market transactions and improve the efficiency of market resource allocation.However,in the current environment of ineffective capital market in China,the Fair Value measurement of commercial banks also increases the risk of stock price crash and the synchronization of stock price,which is not conducive to preventing and controlling major financial risks and improving the roleof market allocation of resources.Therefore,the choice and use of the Fair Value measurement of commercial banks should strengthen corporate governance and internal control.(3)The regulatory role of management power in Fair Value measurement in financial innovation and stock price performance requires that if commercial banks want to improve stock liquidity,they should decentralize their stock rights appropriately,achieve "separation of two positions",reduce the length of service of management and select full-time general managers;if commercial banks want to reduce the risk of collapse,they can give management shares and strengthen the pairing.If commercial banks want to reduce the synchronization of stock prices,they can increase financial innovation,reduce the use of Fair Value measurement,maintain a moderate size of the board of directors,and strengthen the governance of the management of high education and senior titles.In a word,the conclusions and policy suggestions of this paper are helpful for commercial banks to understand how they should carry out financial innovation activities and use Fair Value measurement from the stock price performance,to correctly evaluate the impact of their financial innovation and Fair Value measurement on the stock price performance of commercial banks,and then to balance commercial banks by governing the power of management.The relationship between bank arbitrage and risk is helpful for the state to supervise and regulate the strength of financial innovation and the degree of Fair Value measurement of commercial banks,and to improve the state's ability to prevent and control financial risks.It is also helpful for the public to correctly understand the relationship among financial innovation of commercial banks,Fair Value measurement and stock price performance.Additionally,the conclusions and policy suggestions of this paper contribute a lot to help the public to understand the role of management power in it,to rationally participate in capital investment and finally to balance the relationship between individual investors' returns and risks in this market.