Investors’ Excessive Trading And Stock Price Crash Risk

Stock price crash risk is extreme condition in capital market,which threatens the stability and health of the entire financial system.The study of stock price crash is a hot academic topic.This paper studies the influence on the stock price collapse risk from excessive trading point of view,which not only has the positive significance to prevent price collapse risk prediction,but also provides empirical evidence for regulators to curb short-term capital market transactions.This study has an important theoretical and practical significanceIn the theoretical research,this paper combed the relevant literature at home and abroad,analyzed the influence of excessive trading on the risk of stock price crash based on the theory of irrational behavior of investors and stock reverse effect theory.In empirical research,using the samples of A-share listed companies from 2004 to 2016,this paper explores the relationship between investors’ excessive trading and stock price crash risk.We find that investors’ excessive trading is significantly positive to stock price crash risk.When investors’ excessive trading is more serious,the stock price crash risk is higher.Considering that investors of A-share are consist of individual clients,we further study several situations of abnormal fluctuation of stock trading,the fact shows that if companies’ market value is smaller,companies’ performance is poorer,or volatility of stock is higher,the positive correlation between investors excessive trading and stock price crash risk is more significant.So it is necessary for administration to observe the capital market to find if it is too hot and take necessary measures to stop it.And administration also should monitor the abnormal fluctuation of stock trading to prevent it from lasting for a long period.