Managerial Ability And Stock Price Crash Risk

The stability of capital markets is a long-term concern of government departments and regulators.Due to the lack of effectiveness of the market and other reasons,China’s capital market has been set up many times of ups and downs,"boom and bust".The phenomenon that the stock price drops sharply in a short time is the stock price collapse.The collapse of stock prices has caused huge impact on listed companies,not only causing irreparable losses to shareholders’ wealth and affecting the efficiency of resource allocation,but also shaking investor confidence,seriously hindering the stable and healthy operation of the securities market and even endangering the development of the real economy.Against the background that the party and the state attach great importance to financial risks,it is of great theoretical and practical significance to conduct research on the risk of stock price crash and explore relevant factors to curb stock price crash,so as to effectively prevent systematic financial risks and promote the stable and healthy development of the stock market.As the soul of listed companies,managers’ characteristics have always been one of the key topics of academic concern.Scholars have begun to explore the influence of managers’ traits on enterprises and markets.Ability is the core of manager’s traits.Based on this,this paper takes the A-share listed companies in Shanghai and Shenzhen market from 2010 to 2017 as samples,measures the ability of managers based on DEA-Tobit model,and adopts regression analysis method to empirically test the impact of manager’s ability on the risk of stock price crash.This paper found that there is a significant negative correlation between the managerial ability and the risk of stock price crash.That is,the higher the managerial ability,the lower the risk of stock price crash.Second,as an internal incentive,management shareholding can have an impact on the negative correlation between the two,that is,a higher management shareholding ratio will strengthen the negative correlation between the two.In enterprises with a high proportion of management shares,managerial ability has a significant inhibitory effect on the risk of stock price crash.However,no such relationship was found in enterprises with low management shareholding ratio.Third,as an external constraint,analyst focus can have an impact on the negative correlation between the two,that is,high analyst focus will strengthen the negative correlation between the two.In enterprises with high analyst focus,managerial ability has a significant inhibitory effect on the risk of stock price crash.In companies with less analyst focus,no such relationship was found.Further research found that internal control,the concurrent positions of chairman and general manager,the nature of property rights,and the degree of industry competition can also regulate the inhibitory effect of managerial ability on the risk of stock price crash.In enterprises with high internal control quality,integration of two jobs,non state-owned nature and fierce industry competition,it is found that the increase of managerial ability can significantly reduce the risk of stock price crash,while no such negative relationship is found in the relative control group.The innovation of this paper lies in: first,this paper has opened up a new research angle for the field of influencing factors of stock price crash risk.This paper studies stock price crash risk from the perspective of managerial ability,enriching relevant research literature in the field of stock price crash risk,and helping promote the theoretical understanding of stock price crash phenomenon and the formation of relevant governance theories.Second,this paper enriches the economic consequences of m managerial ability.The value relevance and forecasting function of managerial traits in the stock market have been deeply studied and confirmed.Although the existing literature has begun to explore the economic consequences of managerial ability from the aspects of investment efficiency,earnings quality,internal control quality,enterprise innovation,etc.,there is a big gap in the analysis of the mechanism and path of managerial ability.This paper introduces stock price crash risk to the research framework of economic consequences of managerial ability,and discusses the managers’ important functions in capital market from the stock price crash risk angle to provide direct empirical evidence whether managers traits can stabilize the stock market,contributing to a comprehensive understanding of the role of managers in our capital market.The limitation of this study mainly lies in that there are many indicators to measure managerial ability.In this paper,DEA-Tobit two-stage model is mainly used to isolate enterprise factors from the total factor productivity for regression analysis.Lack of diversity of measurement indicators,the impact on the conclusion of the study remains to be further verified.