Direct Controlling Shareholder's Shareholding And Stock Price Crash Risk

China's stock market plunged twice in 2007 and 2015.On the morning of March 24,2017,China Huishan Dairy Holdings Co.,Ltd.'s share price “flash collapsed”,plummeting 85%.in just half an hour of “diving” and evaporated HK$32.2 billion in one hour,and its stock price plummeted,and the reason for its stock price plunged was the news that the company's “controlling shareholders' misappropriation of funds of 3 billion” was exposed;On June 2,2018,Cui Yongyuan exposed bad news such as “Yin and Yang Contract” and “4 days 60 million high pay”,which led to the stock of Huayi Brothers Media Co.,Ltd.plunging on June 4,almost falling.The occurrence of various stock price crashes has once again caused stock price crash risk to become the focus of academic and practical circles.Because the stock price crash risk,it not only has a huge impact on investor confidence,but also is not conducive to the effective allocation of market resources in China,and even affects to the development of the national real economy.Therefore,studying the influencing factors affecting the stock price collapse risk has important practical significance for safeguarding the vital interests of small and medium investors and promoting the healthy development of China's capital market.As for the cause of the stock price crash risk,the academic community has reached a more consistent conclusion: the management chooses to hide the bad information of the company for various motives such as salary contract and career,but the company has a certain upper limit on the hidden information of bad news.Once the "paper can't hold fire",the bad news is recognized by external investors,which will lead to a large drop in the company's stock price,causing the stock price to collapse,that is,"bad news hiding." However,in addition to the management layer,the corporate governance layer also has direct controlling shareholders.As its shareholding ratio increases,it affects the management's behavior,and even “directs” the manager's behavior,so the direct controlling shareholder also has a certain impact to stock price crash risk.According to the principal-agent theory and information asymmetry theory,the direct controlling shareholder may have the opposite effect of “interest synergy effect” or “empty effect” on the stock price crash risk,and which one is the main research line of this paper.At the same time,this paper will further analyze the internal mechanism of the influence of direct controlling shareholders' shareholding on the stock price crash risk based on the "cash flow" perspective,because one of the main sources of direct controlling shareholders' return from listed companies is cash return,while cash flow information is more reliable and relevant than accounting earnings information,so this paper believes that the interests of direct controlling shareholders are more relevant to the company's cash flow.In the cash flow statement,the company's cash flow mainly comes from the three major activities of operation,investment and financing.The cash flow of investment and financing activities is more susceptible to direct controlling shareholders than the operating activities,while over-investment and cash dividends are respectively used as cash for investment activities and fundraising activities.Based on the literature review of direct controlling shareholder holdings,stock price collapse risk,over-investment and cash dividends,and reviewing the theory of principal-agent and information asymmetry,this paper puts forward theoretical assumption and conducts empirical analysis.This paper selects the data of the A-share main board listed companies in 2009-2017 as the research sample.From the perspectives of over-investment and cash dividend,the paper studies the impact of the direct controlling shareholder's shareholding on the stock price.The following research results are obtained:(1)The direct controlling shareholder's shareholding is negatively correlated with stock price crash risk;(2)The higher the proportion of direct controlling shareholders,the lower the over-investment,the lower the risk of stock price collapse,that is,excessive investment plays a part in mediating effect;(3)The higher the shareholding ratio of direct controlling shareholders,the more cash dividends,the lower the risk of stock price collapse,that is,the cash dividends play a part of the mediating effect;(4)In the mediating effect of direct controlling shareholder's shareholding and stock price collapse risk,the intermediation effect of over-investment is more effective than the mediating effect of cash dividends,and the two are more of a parallel relationship rather than a progressive relationship;(5)Only when the management's shareholding ratio is low and the equity balance is low,over-investment and cash dividends have a mediating effect in the direct controlling shareholder's shareholding and stock price collapse risks,and the intermediation effect of over-investment is stronger than the cash dividend.Mediation effect.The innovations of this paper are as follows: First,in terms of research content,this paper expands the research on the basis of existing literature,and seeks the mediating effect of the direct controlling shareholder's shareholding behavior on the stock price crash risk;Second,the research perspective of the direct controlling shareholder's shareholding behavior is mainly based on the accounting earnings information.However,this paper considers the mediating effect of the direct controlling shareholder's shareholding on the stock price crash risk based on the cash flow information.Third,in terms of research depth,this paper expands the relationship between two mediating effects of over-investment and cash dividends and scenario studies in further research.