Accounting Conservatism,Market Process And Stock Price Crash Risk

As a developing country,our stock market has a short history,the legal mechanism is not yet complete,and most shareholders are not rational enough.These may lead to greater and more frequent turbulences in China's stock market.Compared with developed countries,the phenomenon of stock market crash in China's capital markets is more common.The stock market crash may cause mismatch of economic resources,restrict the development of financial market and disrupt the stable operation of capital market.Therefore,how to prevent and reduce stock market crash risk has become a hot topic in the theoretical and practical circles in recent years.Many scholars in China have researched about the mechanism of stock price crash risk from the enterprise level,such as the position of finance director,gender characteristics of CEO,accounting information quality,accounting conservatism.And many researches about accounting conservatism and stock price crash risk were based on theoretical analysis.This paper will lucubrate the mechanism of accounting conservatism on stock price crash risk and the two mechanisms of action will be empirically tested in the further study.This article will also comprehensively consider internal characteristics and external governance factors,and explore the governance effect of the two factors on the risk of stock market crash.In the existing researches,the literatures that research about stock market crash risk from the external governance environment were mostly from the perspective of institutional investors and analysts.Therefore,this article studies from the macro level-the perspective of the market process,and analyzes whether the relationship between the two will be significantly different in regions with different market processes.Based on the above analysis,this article will summarize and organize the literature on accounting conservatism,market process and stock price crash risk at first.Next,this article will organize literatures on the impact of accounting conservatism on stock price crash risk based on existing research.After that,there is a review of domestic and foreign literature on this basis.Then this article will introduce information asymmetry theory and principal-agent theory,and combine the above two theories to conduct an in-depth analysis of the effect of accounting conservatism on stock market crash risk.It also analyzes the differences of the effects in enterprises in different regions of market process or owned different property rights,then proposes reasonable assumptions.In the empirical analysis section,this paper selects A-share listed companies in Shanghai and Shenzhen from 2011 to 2017 as a research sample.And this paper will explore the impact of accounting conservatism on corporate stock price crash risk.At the same time,the mechanism analysis of the effect of accounting conservatism on stock price crash risk is conducted.Through empirical analysis,it is found that accounting conservatism can significantly inhibit the over-investment behavior of enterprises,thereby reducing the stock price crash risk.And companies which have higher accounting conservatism will have higher information disclosure quality,thus will have lower stock price crash risk.Those means that over-investment and information disclosure quality are acting as the intermediary factors.In further study,I will analyze whether there is a significant difference in the impact of accounting conservatism on the corporate stock price crash risk under different market processes.This study found that the higher the accounting conservatism of the company,the lower the risk of stock price crash,and the market process can adjust the relationship between the accounting conservatism and stock price crash risk.The market process can strengthen the negative correlation between the two.Because state-owned enterprises are more closely regulated by the government,their management's performance is directly linked to their pay,reputation and political status.In state-owned enterprises,the effect mechanism of accounting conservatism and stock price crash risk may be different from that in non-state-owned enterprises.Then a further analysis is proposed to conduct group empirical tests on the relationship between accounting conservatism and stock price crash risk,distinguishing risk state-owned enterprises and non-state-owned enterprises.This paper also divides state-owned enterprises and non-state-owned enterprises,and analyzes the difference between accounting and stock price crash risk.Conclusion is concluded that in state-owned enterprises,the higher accounting conservatism,the lower stock price crash risk.But in non-state-owned enterprises,the relationship between the two is not so significant.The regression results of the model were proved to be robust by robustness tests such as variable substitution,two-stage regression(2SLS)and missing variable test.This article is mainly divided into six parts.The first part is the introduction of this article,which mainly includes the research background,theoretical and practical significance of this article,and clarifies the research content and possible innovation points of this article.The second part is literature reviewing,which reviews and combs the relevant frontier theoretical research at home and abroad respectively from three aspects of accounting conservatism,market process and stock price crash risk,then summarizes the key and unresolved issues in previous research.This article will analyze the relationship between the three using this as a guide.The third part is the theoretical basis and hypothesis.First,it introduces two related theories,namely the information asymmetry theory and the agency theory.Then,it combines the related theories to account for the conservatism,market process,and stock price crash risk.At last,the relationship and influence are analyzed,and the research hypotheses of this paper are put forward.The fourth part is empirical research design.This section explains the selection of research samples and data source,then determines how to measure each variable,and builds an empirical model.The fifth part is empirical research and results analysis.This part gives the measurement results of accounting conservatism,then performs descriptive statistical analysis,regression analysis and verifies the assumptions based on the regression results.Secondly,in the further research,it analyzes the mechanism of accounting conservatism and stock price crash risk,and analyzes the difference effect of accounting conservatism on the stock price crash risk under different property rights.Finally this article performs a robustness test on the empirical results of the previous article by variable substitution,two-stage regression(2SLS)and missing variable test.The sixth part is the research conclusions and policy recommendations.This part first summarizes the research conclusions of this article based on empirical results regression analysis and verifies the assumptions based on the regression results,and then gives some policy recommendations.