The Study On Corporate R&D Expenditure And Stock Crash Risk

The stock market crash of 2015 has caused great damage to the Chinese capital market and to investors' confidence in Chinese capital market.It is because of its devastating nature that the stock crash has attracted attention of the regulatory authorities,scholars and investors.What cause the stock price collapse of the company?and how to reduce the stock crash risk.These questions have long been a hot topic in the academic field.In this paper,based on the sample of A-Share Listed Companies in China from 2007 to 2016,1 empirically examined the relationship between R&D expenditure and stock crash risk.I found that the R&D expenditure of the company is significantly and positively related to the company's future stock crash risk.Further studies showed that in the sample with lower(higher)proportion of shares held by big shareholders,the positive correlation between R&D expenditure and stock price crash risk is very significant(insignificant);in the sample of non-soe firms(soe firms),this positive relationship is significant(insignificant).The conclusion of this study shows that in Chinese stock market,higher corporate R&D investment is often accompanied by higher stock crash risk,higher proportion of shares held by big shareholders will help relax this effect.In addition,the managers of non-soe firms are more likely to manage negative information of R&D activities,leading to higher stock crash risk.To some extent,this paper may help us better understand the economic consequences of R&D expenditure and understand how to curb stock crash risk and promote the healthy development of Chinese capital market.