The Impact Of Product Market Competition On The Stock Price Crash

Since General Secretary Xi proposed in the report of the 19th National Congress to "deepen the reform of the financial system,strengthen the financial services of the real economy,increase the proportion of direct financing,and promote the healthy development of multilevel capital markets," China's emphasis on the capital market has been raised to a new level.In recent years,China has accelerated the development of the stock market.A series of opening measures were also proposed,and a new section was also added to pilot the registration system.Although China's stock market has begun to take shape after nearly thirty years of development,and has a relatively complete supervision system.But compared with developed countries,China,as an emerging market,has relatively opaque information and high information collection costs,and a more relaxed regulatory environment.Which are relatively immature and unstable,so the risk of a stock price crash is higher than the others.A stock price crash refers to the rapid decline in the price of a company's stock in a short period of time.The stock price crash will not only directly damage the interests of investors,affect the stability and healthy development of the stock market and financial market,but also cause the mismatch of resources,and even endanger the normal operation of the real economy,and trigger an economic crisis.Therefore,it has become a subject of much attention in the fields of economics,finance and management at home and abroad,and the influencing factors and mechanism of the stock price crash have also become hot topics in the academic community.At present,domestic and foreign research on the factors affecting the risk of stock price crash is mainly focused on internal factors such as management characteristics,controlling shareholders,and information disclosure,and market external factors such as analysts,institutional investors,external audit,and media supervision,which has formed a rich research results.As an external market factor,product market competition,as a proven external governance mechanism that can play an important role,has not yet received sufficient attention in this area.Based on this,the paper analyzes the internal relationship of these two factors.Selecting the listed companies in the stock market from 2007 to 2017 as a sample,the model was used to analyze the relationship between these two factors.The following results were obtained:(1)There is a significant negative correlation between product market competition and the risk of a listed company's stock market crash,that is,product market competition can suppress the risk of a listed company's stock market crash.(2)The inhibitory effect of product market competition on the risk of stock market crash of listed companies is more obvious in companies with higher internal control quality,that is,product market competition and company internal control can jointly suppress the risk of corporate stock market crash.(3)Management's shareholding can improve the suppression effect of product market competition on the risk of listed company's stock price crash.In further research,this article also finds that the nature of property rights will affect the inhibitory effect of product market competition on the collapse risk of individual stock prices.Specifically,in the high competition group,the restraint effect of product market competition on the risk of individual stock price collapse is more obvious in private enterprises.Finally,according to the above conclusion,the following suggestions are put forward:(1)Establish a better competitive environment and give full play to the natural regulatory role of the market.The government should take measures to stimulate the vitality of the market and allow the market to exert its own external regulatory role.(2)Improve the company's various monitoring mechanisms to enhance the efforts of managers and the company's own capabilities,and promote the exploration and application of management incentive methods in order to improve the internal governance level of the enterprise.