Research On Corporate Over-investment And Stock Price Crash Risk

With the continuous increase of listed companies in China and the continuous development of financial markets,the stability and security of the stock market are very important.The"extremely steep rise and fall"of the stock price is obviously not conducive to the healthy and stable development of financial market in china.In particular,the stock price collapse risk formed by the "plunge" is even more damaging.Therefore,the stock price crash has gradually become the topic of concern for scholars at home and abroad.The article discusses the relationship between corporate over-investment and the future stock prnce crash risk using the Shanghai-Shenzhen A-share listed company as the research object in 2010-2016.Further,the companies are grouped and regressed according to the share of external institutional investors and the quality of internal control.Study the influence of institutional investor shareholding ratio and internal control quality on the relationship between over-investment in the company and future stock price collapse risk.The study finds that the over-investment of listed companies is positively correlated with the risk of future stock price crashes.It indicates that over-investment will increase the rnsk of future stock price collapses.After considering the proportion of institutional investors and the quality of internal control,it has found that the companies with a high proportion of institutional investors,the positive correlation between over-investment and stock price crash risk is even more pronounced.When institutional investor’ s shareholding ratio keeps rising,it may collide with management and make excessive contributions to common interests.Making investment decisions and hiding negative news and reducing the voluntary disclosure level of listed companies will increase the positive relationship between excessive investment and stock price crash risk.Among the enterprises with lower internal control quality,over-investment and stock price crash risk are significantly positively correlated.In a group with higher internal control quality,over-investment has no significant impact on the stock price crash risk,and the quality of internal control of listed companies has improved.It may enhance the company’s governance,inhibit and timely correct management’s over-investment behavior,and reduce the risk of excessive investment in the stock price crash.The series of studies in the article can further verify and improve relevant theoretical research,and also extend the consequences of over-investment from the real economy level to the stock market level.The studies enrich our understanding of the impact of corporate investment decisions,and supplement the study about the influence factors of stock price collapse risk from the perspective of corporate investment behavior.The research on the factors that affect the risk of stock price crashes is of great significance to better understand the impact of corporate over-investment on the stock price crash risk.In practice,based on the research results,we can design or improve related management systems and mechanisms in a targeted manner,make recommendations on reducing the risk of stock price crashes,reduce the occurrence of "financial vision"——a stock price crash,maintain the stability of financial markets,and protect investor rights and interests.The innovation of this article lies in the innovation and richness of research content.It not only the studies the relationship between over-investment and stock price crash risk,but also joins the factors of institutional investors’ shareholding and internal control quality,and explored their regulatory effects on the relationship between corporate over-investment and stock price collapse risk.This is of great significance in finding mechanisms and methods to mitigate the risk of a share price crash,and it also deepens the research on the relationship between corporate over-investment and stock price crash risk.