A Study On The Impact Of Accounting Conservatism On Stock Price Crash Risk

Individual stock price crash risk is the probability that the stock price collapses suddenly and sharply. If a stock price crashes, investors' wealth will be decreased and the market efficiency will be lowed. The existences of information asymmetry and principal-agent problems are the most important two reasons of stock price crash risk. As an important governance mechanism that can coordinate internal and external stakeholders' conflict of interest, accounting conservatism can effectively ease the principal-agent problems and reduce the information asymmetry, and then, improve the level of investor protection.Firstly, we summarize the literature of accounting conservatism and stock price crash risk. Secondly, we analyze the governance mechanism of accounting conservatism and the generative mechanism of stock price crash risk, and then analyze the impact of accounting conservatism on stock price crash risk based on the principal-agent theory and signaling theory. Thirdly, we select the A-share listed companies from 2009 to 2015 as research samples, measure accounting conservatism and stock price crash risk and analyze the measure results. Finally, we test the impact of accounting conservatism on stock price crash risk and how the market situations, property rights and industry characteristics affect the relation.The results show that, on the whole, along with the improvement of accounting conservatism, the stock price crash risk significantly decreases. In the bear market, the relation between accounting conservatism and stock price crash risk is more pronounced. Compared with the non-state-owned listed companies, the state-owned listed companies have higher accounting conservatism and lower stock price crash risk, and accounting conservatism can significantly affect stock price crash risk, but the effect is not pronounced in the non-state-owned companies. There are significant differences between the accounting conservatism and the stock price crash risk in different industries, traditional industry listed companies' accounting conservatism can significantly affect stock price crash risk, but the effect is not significant in emerging industry listed companies.