The Effect Of Earnings Management On The Stock Price Crash Risk

In the context of the rapid development of the global capital market,the stock price volatility has become a common phenomenon.In particular,the stock price crash will disrupt the stable operation of the market and endanger the national real economy.And in current accounting,accounting personnel will inevitably have subjective judgments and estimates.It is this subjective bias that gives the space for earnings management.In order to maximize their own interests,the company’s management tends to use earnings management to conceal unfavorable information,which may cause overvaluation of stock price.As time goes by,when a certain critical point is reached,unfavorable news will be exposed,causing panic from outside investors,stocks being sold off in large numbers,and the phenomenon of stock price crash appearing.In this context,it is of great significance to analyze the effect of earnings management on the stock price crash risk.This paper takes all A-share listed companies as samples,collects relevant data from 2007 to 2017,and finally screens out 14,692 observed variables.Taking accrual earnings management and real earnings management as explanatory variables and stock price crash risk as explained variable,multiple linear regression models are constructed to investigate the effect of accrual earnings management and real earnings management on stock price crash risk.We also examine whether internal and external supervisory mechanisms can weakened the impact of earnings management on stock price crash risk.The empirical results show that both accrual earnings management and real earnings management have a significant positive impact on stock price crash risk,and analysts tracking can effectively mitigate the impact of accrual earnings management on stock price crash risk.But analysts tracking cannot mitigate the impact of real earnings management on stock price crash risk.The internal control mechanism of state-owned shares can both reduce the impact of accrual earnings management and real earnings management on the stock price crash risk.Therefore,effective protection of the interests of investors can only be achieved if both internal and external supervisory mechanisms are improved.