The Effect Of Goodwill Impairment On The Stock Price Crash Risk

After many waves of mergers and acquisitions,many listed companies in China have generated a large number of goodwill assets,and the potential risk of subsequent impairment of goodwill can not be ignored.The impairment of goodwill assets,which indicates that the acquisition of goodwill assets fails to realize the expected value gains,may be regarded as a negative news by market investors,causing them to make negative investment decisions and triggering the acquirers' stock price violation.Therefore,this article attempts to study the effect of goodwill impairment on the stock price crash risk under the market reality that the scale of merger and acquisition goodwill of China's listed companies.Using the non-financial listed companies in China's A-share markets spanning from 2008 to 2018 as samples.The results of the study show that the impairment losses have a significant positive effect on the companies' stock price crash risk,and the association mainly exists in companies with a higher information asymmetry.This shows that the concealment of negative news is an important reason for the risk of stock price crash.Due to the existence of information asymmetry,managers deliberately conceal negative company news for their own benefit,leading to excessive optimism from outside market investors and forming a stock price bubble.Once a large amount of goodwill impairment is accrued,the accumulated negative news is released to the market,which causes the stock price to fall.Further research found that the higher the shareholding ratio of the largest shareholder,the greater the ability of the large shareholder to play a supervisory role,alleviate the principal-agent problem of shareholders and management,and suppress the positive effect of goodwill impairment on the stock price crash risk,thereby reducing stock price crash risk,and the effect compared with private enterprises is stronger in state-owned enterprises.The conclusions of this paper provide empirical evidence for the economic consequences of goodwill impairment information under the new accounting standards,and also provide useful practical inspiration for how to prevent and resolve the risk of stock price collapse and promote the healthy development of China's capital market.