Industry-Specialist Auditors, Internal Control, And Stock Price Crash Risk

Since the last century,with the continuous development of economy and society,stock market is turbulent,and stock price is soaring or plunge,especially the stock price crash risk caused by the “plunge”,seriously disturbed the smooth operation of the capital market,and bring the normal operation of the company and investors personal wealth a great impact and destruction.Especially in 2015,China's new round of stock price “crash” pushed the topic of stock price crash risk to the hot spots in academic research.According to the existing literatures,most scholars analyzed influence factors of stock price crash risk from the perspective of quality of accounting information,capital market participants,and external environment,and few literatures study the influence factors of the risk of Chinese stock price crash risk from the perspective of external audit supervision.The accounting firm's audit can effectively reduce the degree of information asymmetry,alleviate agency conflicts by its professional ability,having a certain impact on stock price crash risk.Audit industry expertise as an important manifestation of the auditor's professional ability,what role will it play in stock price crash risk? This is also the main content that this article will study.Further consideration,in the past 10 years,China's internal control has gradually developed,and the relevant laws and regulations have been gradually perfected,and regulators are increasing emphasis on the construction of internal control system of listed company,and the listed company itself is also actively establish and perfect internal control system.So,the internal control in our country will produce what kind of impact on the capital market? Therefore,this paper will take stock price crash risk as the research core,focusing on the impact of China's audit industry expertise to stock price crash risk,on this basis,to further analyze whether the internal control can ragulate the relationship between audit industry expertise and stock price crash risk.Based on the theoretical basis of information asymmetry,principal-agent theory and behavioral finance,the paper chooses all A-share listed companies in Shanghai and Shenzhen Stock Exchange from 2007 to 2016 as the research object,making use of normative research and empirical research methods,mainly studying the influence of audit industry expertise on stock price crash risk,and introducing internal control,to study the regulating effect between audit industry expertise and stock price crash risk.The results show that:(1)the audit industry specialization has a significant negative correlation with the stock price crash risk,that is,the audit industry expertise helps to reduce the stock price crash risk;(2)internal control aslo has a significant negative correlation with he stock price crash risk,namely the more perfect internal control system,the lower stock price crash risk;(3)high-quality internal control can strengthen the positive effect of audit industry expertise on the stock price crash risk,namely the more perfect enterprise internal control,more conducive to play the external governance function of audit industry expertise,which can effectively restrain the stock price crash risk.Finally,according to the research conclusion,the paper puts forward some suggestions to the external accounting firm,the enterprise internal management and other regulatory agencies,in order to further improve the audit quality,perfecting the internal control system,thereby reducing the stock price crash risk,and achieve the goal of smooth operation of the capital market.At the same time,the paper points out the deficiencies in the research process and puts forward the possible future research directions.This paper analyzed the relationship between the audit industry expertise,internal control and stock price crash risk through the empirical study,on the one hand enriching the study of factors influence the stock price crash risk,on the other hand expanding the relevant economic consequences literature of audit industry expertise and internal control.