Accrual Earnings Management And Crash Risk:the Role Of Corporate Social Responsibility

With the continuous advancement of financial deepening reform,China’s securities market has developed rapidly,which is reflected in the number of listed companies has continued to increase,investor activity continues to increase and the regulatory system is more complete.Nevertheless,the development of stock market is still not mature and stable enough,for example,incidents of violations of laws and regulations by enterprises emerge in an endless stream,and the phenomenon of individual stocks skyrocketing and falling has continued.From 2015 to 2016,the "1000-stock limitdown" incident greatly damaged investors’ confidence in the capital market,hindered the healthy and sustainable development of the capital market,and threatened the smooth and orderly operation of the entire economy.The report of the 19 th National Congress of the Communist Party of China pointed out that it is necessary to fight the tough battle to prevent and defuse major risks,improve the financial supervision system,and keep the bottom line of no systemic financial risks.Therefore,the research on the stock price crash risk has certain practical significance.Many scholars believe that management,based on the principal-agent theory of information asymmetry,will use earnings management methods to cover up the company’s bad news.When the bad news accumulates to a critical point,the stock price will plummet.Stakeholder theory believes that corporate social responsibility,as a coordination mechanism to balance conflicts among various stakeholders,can attract high-quality investors,enhance corporate value,and reduce information asymmetry.In particular,fulfilling corporate social responsibility can also help maintain a good corporate image,increase reputational capital,and reduce stock price crash risk.However,the "tool hypothesis" theory of corporate social responsibility believes that corporate social responsibility is a self-interested tool for management,that is,companies fulfill corporate social responsibility,divert investors’ attention from management,and then cover up earnings management behavior,aggravating the information asymmetry of internal and external,and eventually lead to the stock price crash risk.Therefore,the impact of corporate social responsibility on the relationship between earnings management and stock price crash risk is worthy to study.Based on the above analysis,this paper selects A-share listed companies in Shanghai and Shenzhen from 2011 to 2019 as research samples to study the impact of corporate social responsibility on the relationship between earnings management and stock price crash risk.In order to further examine the moderating effect of corporate social responsibility,this paper will perform group regression according to the mean value of corporate social responsibility scores.In addition,this paper studies the impact of earnings management on stock price crash risk under different ownership properties.In further analysis,this paper studies the impact of accrual earnings management on stock price crash risk and the moderating effect of corporate social responsibility on earnings management and stock price crash risk,whether there is a difference between real earnings management and accrual earnings management.Furthermore,this paper studies the impact of earnings management on stock price crash risk under different disclosure methods of corporate social responsibility.The empirical research of this paper draws the following conclusions:(1)Accrual earnings management will increase the stock price crash risk,especially for non-state-owned enterprises;(2)Corporate social responsibility has a negative moderating effect on the relationship between accrual earnings management and stock price crash risk;(3)When companies conduct real earnings management,corporate social responsibility will expand the positive impact of real earnings management on stock price crash risk;(4)Under different disclosure methods of corporate social responsibility,earnings management will increase the stock price crash risk of companies that are required to disclose social responsibility reports.