Bias Of Earnings Forecast,Institutional Investor Heterogeneity And Stock Price Crash Risk

In recent years,many stock price crashes have occurred in the Chinese securities market,which not only resulted in stock market volatility,but also seriously damaged investors’confidence and hindered the healthy development of China’s securities market.In 1998,in order to make up for the lag in the regular disclosure of financial reports,the CSRC required qualified companies to make earnings forecast and encouraged other companies to release them voluntarily.However,because the earnings forecast has not been audited,it is likely to deviate from the actual performance due to subjective or objective factors,which will affect investors’ decisions and the stability of the company’s stock price.Based on the practical problems,this thesis first conducts a theoretical analysis.Then,this thesis selects A-share listed companies from 2014 to 2021 as the research object,empirically tests the relationship between the bias of earnings forecast and stock price crash risk,and incorporates the regulatory role of institutional investor heterogeneity.The robustness test is conducted by replacement variable regression,PSM and other methods.After that,this thesis conducts mechanism test of how the bias of earnings forecast affects the stock price crash risk.Finally,this thesis further refines the research content,and conducts grouping tests from the dimensions of earnings forecast,company characteristics and macro environment to verify whether the regulatory role of stable institutional investors is still valid,which has certain theoretical and practical significance.This thesis finds that the bias of earnings forecast significantly increased the stock price crash risk.The bias of earnings forecast,whether caused by subjective or objective factors,will increase the possibility of stock price collapse by increasing the level of information asymmetry,misleading investors’ decisions,reducing the credibility of the company and damaging the company’s reputation.Secondly,stable institutional investors can inhibit the positive correlation between the bias of earnings forecast and the stock price crash risk,and play a negative regulatory role.Stable institutional investors invest for the purpose of sharing long-term returns,which have strong willingness and professional ability to participate in corporate governance,and urge management to release more accurate information.At the same time,stable institutional investors can send out positive signals,alleviate the market’s distrust and curb the stock price crash risk.Finally,further research finds that the regulatory role of stable institutional investors is still valid in the mandatory earnings forecast group,the good news earnings forecast group,the private enterprise group,the group before the change of accounting standards,and the bear market group.The innovation points of this thesis are as follows:Firstly,this thesis tests the consequences of"improving the degree of information asymmetry" and "reducing the credibility" due to the bias of earnings forecast.This makes the transmission relationship between the bias of earnings forecast and the stock price crash risk clearer.Secondly,this thesis focuses on the regulatory role of institutional investor heterogeneity,which can adjust the relationship between the bias of earnings forecast and the stock price crash risk,expanding the scope of existing research.Finally,based on the earnings forecast,company characteristics,and macro environment dimensions,this thesis further studies whether the regulatory role of stable institutional investors is still valid,deepens the conclusion and expands the depth of existing research.