Empirical Research On The Inhibition Effect Of Hedge Accounting To Stock Price Crash Risk

The final draft "International Financial Reporting Standards 9-Financial Instruments"(IFRS 9)was issued by IASB in July 2014.IFRS 9 expands the scope of the application of hedge accounting,simplifies the process of hedge accounting,and strengthens the information disclosure of the risk management and hedge accounting.In view of the practical need and the convergence with international financial reporting standards,CASB released CAS24 revised draft in April 2017.In this context,studying the inhibitory effect of hedge accounting on crash risk has important significance on enriching hedge accounting research and supporting hedge accounting standards revision.Selecting data from Chinese A-share firms during 2009 and 2014 as samples,this paper provides evidence hedge accounting reduces crash risk by lowering the level of asymmetric information between managers and outside investors.Moreover,the inhibitory effect of hedge accounting on stock price crash risk can not be replaced by fair value option.Furthermore,the results show that the negative relation between hedge accounting and firm-level crash risk is stronger for firms with lower analyst coverage.Therefore,hedge accounting has positive economic impact at our country as it can reduce crash risk.China needs to improve firms' ability to manage risk,issue the application guide of hedge accounting standards,improve the technology of accounting treatment and enhance regulation of accounting information disclosure of listed company so as to guarantee hedge accounting can be properly executed.