Investor Sentiment,Accounting Conservatism And Stock Price Crash Risk

The stock price crash is a kind of abnormal market situation caused by sharp dropping in stock prices.It not only disrupts the financial market order,but also seriously damages the interests of investors and the confidence of the market.Under a complex financial system,the stock slump may affect many industries and lead to the collapse of the entire stock market.Due to the large proportion of individual investors in A-shares,the "herd effect" is highlighted,which tends to trigger irrational investment behavior and increase stock price volatility.Managers of listed companies conceal negative events for their own interests,the quality of corporate accounting information declines,and bad news breaks out under the continuous backlog,which also increases the risk of stock price collapse.The bounded rationality of behavioral finance has shown that investor sentiment is one of the root causes of stock price collapse risk,and accounting information disclosure is closely related to market sentiment and stock price collapse.Grasping the order of the relationship among the three characteristics can prevent the risk of stock price crash.This paper takes A-share listed companies in China from 2010 to 2020 as the data sample.The comprehensive investor sentiment index is constructed through the weighted average of principal component analysis and the C-SCORE model of robustness index proposed by Khan and Watts(2009)is used to measure the accounting robustness of listed companies,which reflects the degree of asymmetry of confirmation of good and bad news.NCSKEW and DUVOL were used to explain the risk of stock price collapse.Then it builds the double fixed effect model to study the relationship between investor sentiment,accounting conservatism and stock price crash.And behavioral finance theory explains the results.The results of the study found that: there is a positive correlation between investor sentiment and stock price crash risk,the higher the sentiment,the greater the stock price crash risk;and there is a negative correlation between accounting conservatism and stock price crash risk,the higher the accounting conservatism,the higher the stock price crash risk;and there is a negative correlation between investor sentiment and accounting conservatism,with the increase of investor sentiment,the company’s accounting conservatism decreases;through the mediation effect test,it can be seen that accounting conservatism is closely related to investor sentiment and accounting conservatism.It has a partial mediation effect on stock price crash risk.Finally,it puts forward some suggestions from the perspective of the quality of accounting information to manage investor sentiment and deal with the risk of stock price crash.