Research On The Impact Of Managers’ Abnormal Intonation On The Risk Of Stock Price Collapse

In the age of Internet,all kinds of data and information are emerging,and the content and disclosure methods of listed companies are gradually diversified,which makes the research object of information disclosure no longer limited to financial information,and more and more people start to pay attention to the textual information disclosed by enterprises.Compared with financial information,textual information has many advantages.The text is also easier to read and understand,which can better supplement the financial information and help investors understand the real situation of the company,especially the "Management’s Discussion and Analysis"(MD&A)section in the annual report disclosed by enterprises,as an important text for disclosing non-financial information and In particular,the MD&A section of the annual report,which is an important text for disclosing non-financial information and forward-looking information,has been widely received and has an invaluable position in information disclosure.On the other hand,unlike financial information,textual information is not subject to disclosure rules and is more manipulable and hidden,making it difficult to measure the truthfulness of its content.If management strategically manages the tone of the disclosed text for personal purposes,exaggerating the company’s performance or whitewashing unfavorable news to confuse analysts and investors in the market,it may lead to an increased risk of stock price collapse.To this end,this paper uses the 2007-2020 A-share listed companies in Shanghai and Shenzhen as the research sample,and conducts a study by constructing a multiple regression model from the tone dimension of the "Management Discussion and Analysis" section in the annual reports.In order to quantify managers’ abnormal intonation,this paper first calculates the net positive intonation in the text,then uses OLS regression to remove the part of the intonation that reflects the company’s fundamentals,and uses the residual item after regression(i.e.management’s manipulation of information)as the proxy variable of managers’ abnormal intonation.This paper analyzes the mechanism and path of the abnormal tone in the "Management Discussion and Analysis" section of the annual report of listed companies on the risk of stock price collapse.The empirical results show that:(1)Managerial abnormal tone can raise the likelihood of a stock price crash.It indicates that when managers manipulate textual information for their own interests,abnormal tone of voice will release a signal to the market to influence the behavior of information users,thus leading to an increase in the risk of corporate collapse;the above findings still hold after endogeneity and robustness tests.(2)Compared with state-owned enterprises,managers of non-state-owned enterprises are more motivated to manipulate the tone and raise the likelihood of a stock price crash.This is due to the fact that SOE managers value their status as "political people",so they pay more attention to the wording of text messages.In contrast,the management of non-state-owned enterprises pay more attention to their own economic interests,and their motivation for strategic management of text information is also stronger.(3)Under different audit institutions,the impact of managers’ abnormal tone on the risk of stock price collapse is also different.When the audit institutions are non big four and non overseas,the management’s manipulation of tone will significantly enhance the risk of stock price collapse,while when the audit institutions are big four or overseas,there is no significant relationship between the two.It indicates that when the auditor hired is poor,the firm’s disclosure quality is also lower and thus the likelihood of manipulation by managers is higher,raising the likelihood of a stock price crash event.(4)Companies with financial restatements are more likely to engage in tone management,which can lead to stock price collapse risk.Since companies with financial restatements usually have poorer disclosure quality,and the more opaque the information is,the more difficult it is for enterprises to detect manipulation in text information.It is easy for management to hide negative information of enterprises through abnormal intonation,which will lead to stock price collapse.(5)Under different agency problems,managers’ abnormal intonation has different effects on stock price collapse risk.The study found that when executives are faced with "conflict of interest",they tend to manage the tone of accounting text to cover up their self-interest behavior,which leads to the failure of information transmission function of the tone of accounting text,damages the transparency of market information,and this behavior can trigger the occurrence of stock price crashes.(6)Analyst optimism bias plays an intermediary role in the process of managers’ unusual tone influencing the risk of stock price collapse.For annual report information,the results show that analysts are also affected by the abnormal tone of the managers,and have an overly optimistic estimate of the enterprise,while the analyst’s optimistic bias will further affect the market judgment and increase the risk of stock price collapse.The innovation points of this paper are mainly divided into the following aspects:(1)Previous studies on the impact of enterprise managers on stock price collapse risk mainly analyzed from the aspects of managers’ characteristics,overconfidence,etc.This paper mainly considered the impact of managers’ manipulation on stock price collapse from the text information,and subdivided the text information through normal intonation and abnormal intonation,providing new ideas for the study of stock price collapse risk.(2)By introducing the principal-agent problem,this paper analyzes the strategic information disclosure behavior of managers who hide negative news or exaggerate positive news,reveals the motivation of managers,and provides new evidence for the management’s information manipulation behavior.(3)This paper further studies the impact path of management and stock price collapse risk.With the analyst’s optimism bias as the starting point,it is studied whether analysts can identify the management’s manipulation behavior,or whether they will be affected by their tone of voice to increase the optimism bias,and then increase the risk of stock price collapse.This provides a new perspective for future research.