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This study aims to examine the effects of firms’ accounting disclosure policies on stock price synchronicity and stock crash risk, using a sample including 13 emerging markets. Furthermore, this research investigates how these relationships are affected by country-level investor protection and firm-level governance rankings.

This paper uses accounting disclosure measures constructed based on survey questions by Credit Lyonnais Securities Asia (2001, CLSA). The accounting disclosure measure is used to explain the two dependent variables, stock price synchronicity and stock crash risk. The stock price synchronicity measure is defined as the logistic transformation of R2 following Hutton et al. (2009) and Jin and Myers (2006). R2 is taken from the estimation of an extended market model. The stock crash risk variable is measured as the frequency difference between extremely negative and positive stock return residues following Jin and Myers (2006). These stock return residues are taken from the estimation of an extended market model. Because the CLSA firm-level disclosure data are from 2000, this paper matches other data taken from the same year, for consistency. The final sample includes 204 observations in 13 emerging countries.

This paper finds that firms’ stocks are less synchronized with the entire market and have less crash risk if firms have superior accounting disclosure policies. These results suggest that the cost to collect firm-specific information may be decreased for investors if firms are more transparent. Thus, these firms’ stocks have more firm-specific information content. These results also suggest that management is less likely to hide some negative information and release such negative information suddenly in the future if firms have higher levels of accounting disclosure. Thus, these firms’ stocks are less likely to crash. In addition, the influences of firms’ accounting disclosure policies on stock price synchronicity and crash risk are more significant for firms with superior country-level investor protection and firm-level governance rankings. These results imply that external investors place more value on accounting disclosure by well-governed firms because firms with superior governance standards are less likely to intentionally disclose misleading information. Thus, these firms’ stocks can incorporate more firm-specific information and have less crash risk.

The current study is the first to show that the effects of accounting disclosure on stock price synchronicity and crash risk are more pronounced for firms with superior country-level investor protection and firm-level governance standards. Thus, this research extends the literature by providing a comprehensive picture of the influences of accounting disclosure on stock markets. In addition, the existing literature (Chen et al., 2006; Durnev et al., 2004) shows that firms with lower stock price synchronicity are associated with higher investment efficiency because managers invest based on the information in stock prices. Obviously, higher stock crash risk is highly related to higher bankruptcy risk for firms. Thus, examining the effects of accounting disclosure on stock price synchronicity and stock crash risk is of obvious importance to policy makers.

This paper aims to investigate the economic consequence of the tax reductive strategy on stock price. The authors’ theory, empirically reinforced, suggests managerial tax aggressiveness endangers the corporation through a heightened risk in stock price crashing. Information opacity worsens the situation by reinforcing the relationship. Policymakers should emphasize two aspects: market openness and tighter institutional monitoring. The evidence shown in this paper demonstrates that these two weaken the tax aggressiveness impact on risk of a crashing stock price.

The sample in this paper consists of 9,702 observations from listed firms from 2008 to 2013 in China. The tax rate is manually collected and all the other original data used in this study are sourced from Wind and China Capital Market and Accounting Research databases. Both logistic regression and ordinary least squares regression methods are used to test the hypothesis in this paper.

One key insight is in tax aggressiveness to be strongly correlated with a greater risk of future stock price crashing. The authors also found information opacity to exert a positive moderating effect. That is, the higher the information opacity, the stronger and more positive the correlation between tax aggression and stock price crash risk. However, the market process and an institutional investor have opposite, negative impacts. An open market environment reduces their correlativeness. Similarly, stronger institutional vigilance leads to an attenuation of such a co-relationship.

The findings of this paper have wide policy implications for management and control by authorities of listed corporations. Aggressiveness in management of corporate taxes accentuates the risks borne by stockholders. If so, internally within the corporation, such aggression shown by management, if not proscribed, could be subject to scrutiny, possibly by an independent committee. Externally, this may be countered by the authority in emphasizing three key factors: openness in information sharing, the market environment and tighter institutional monitoring.

This study provides a consequential theory of aggressive management of tax, rigorously analyzed and strongly, empirically supported. Overall, aggressiveness in tax management is related with assumption of higher risks in the crashing of stock price. The relationship is enhanced through information opacity, but reduced via market environment and institutional monitoring.

The purpose of this paper is to explore the impact of product market competition on the risk of stock price crash based on the degree of industry competition and the competitive position of enterprises.

This paper chooses the data of Shanghai and Shenzhen A-share listed companies from 2009 to 2017 as samples and uses a threshold regression model to explore the impact of product market competition on the risk of a stock price crash.

The results show that: the overall level of industry competition is negatively correlated with the risk of stock price crash; the competitive position of enterprises and the risk of a stock price crash. The correlation is not significant: for high competitive enterprises, the degree of industry competition is negatively correlated with the risk of stock price crash; for low competitive enterprises, the degree of industry competition is positively correlated with the risk of a stock price crash and the conclusions obtained have passed the robustness test.

This paper not only enriches the literature on the relationship between product market competition and the risk of stock price crash but also has reference significance for supervisors to allocate resources to supervise information disclosure of listed companies.

This study aims to examine the risk-resistant role of environmental, social and governance (ESG) performance in the capital market, focusing on an organizational standpoint. Furthermore, it aims to offer management decision advice to companies seeking protection against stock market risks. Conclusions obtained through this research have the potential to enrich the economic consequences of ESG performance, provide practical implications for enhancing corporate ESG performance, improving corporate information quality and stabilizing capital market development.

Based on the data of Chinese A-share listed companies from 2009 to 2020, this study examines the risk-resistant function of ESG performance in the capital market. The impact of ESG performance on management behavior is analyzed from the perspective of organizational management and the three mechanisms of pre-event, during the event and post-event.

This paper demonstrates that companies that effectively implement ESG practices are capable of effectively mitigating risks associated with stock price crashes. Heterogeneity analysis reveals that the inhibitory effect of ESG performance on stock price crash risk is more pronounced in nonstate-owned enterprises and enterprises with higher levels of marketization. After controlling for issues such as endogeneity, the conclusions of this paper are still valid. The mechanism analysis indicates that ESG performance reduces the risk of stock price crash through three paths of organizational management: pre-event, during the event and post-event. That is, ESG performance plays the role of restraining managers’ opportunistic behavior, reducing information asymmetry and boosting investor sentiment.

This paper provides new insights into the relationship between ESG performance and stock price crash risk from an organizational management perspective. This study establishes three impact mechanisms (governance effect, information effect and insurance effect), offering a theoretical basis for strategic corporate decisions of risk management. Additionally, it comprehensively examines the contextual differences in the role of ESG performance, shedding light on the specific domains where ESG practices are influential. These findings offer valuable insights for promoting stable development in the capital market and fostering the healthy growth of the real economy.

Does the choice of listing process matter in determining a firm's future crash risk? It is understood that the main function of an equity market is to provide price discovery, however, it is not clear whether the choice of listing methods would matter to the shareholders' wealth in the long term. We are the first to answer this question by utilising a hand-collected dataset that identifies all companies that went public via reverse merger (RM) in a growing emerging market.

Using hand-collected data from 2000 to 2018 in China, we follow the literature to construct two crash risk measures for RM and IPO firms. Our main analysis is performed using OLS regressions on the full sample as well as a sample using Propensity Score Matching. Our results hold with a number of robustness checks.

We find that reverse merger (RM) firms exhibit higher future stock price crash risk than initial public offering (IPO) firms. This relationship is more predominant in non-state-owned enterprises, and we find weak evidence suggesting such relationship weakens as firms stay longer in the market. There is no significant difference in future stock price crash risk between RM firms listed during IPO suspension periods and normal IPO firms.

We are the first to study the choice of listing method and its impact on firms' future stock price crash risk.

This study focuses on listed and over-the-counter (OTC) companies in the Taiwan Stock Exchange. It found that an increase in the ownership proportion of institutional investors (INs), including foreign investors, investment trusts, and dealers can enhance the informativeness of stock prices. The relationship between these factors follows an inverted U-shaped pattern, indicating that excessively high ownership ratios can actually lead to a decrease in the informativeness of stock prices. Additionally, increasing the ownership proportions of foreign investors and investment trusts can reduce the risk of stock price collapse, while dealers show no significant relationship in this regard. This study also reveals that the technical variable of the price deviation rate is an important explanatory factor for post-collapse returns. It is positively correlated with the magnitude of the price decline after a collapse, meaning that stocks with weaker pre-collapse performance experience larger post-collapse declines. When the data during the 2020 pandemic period are excluded, changes in foreign ownership ratios show a significant positive correlation with postcrash returns in both the long and short term. The significant correlation in the short term may be due to a high proportion of foreign ownership. Any reduction in this could put pressure on stock prices, and retail investors may follow suit and sell-off, using foreign investors as a reference. The significant correlation in the long term might be due to foreign investors themselves possibly also trying to avoid the pressure that their own short-term sell-offs could exert on stock prices. The changes in the ownership ratios of investment trusts and dealers indicate that medium and long-term changes have a significant impact on postcrash returns, while the changes in the major players' ownership show no significant correlation. When data from 2020 are included in the analysis, the significance of all INs decreases.

The purpose of this paper is to empirically analyze the effects of stock price synchronicity and herding behavior of qualified foreign institutional investors (QFII) on stock price crash risk, especially the mediating effect of herding behavior of QFII on the relation of stock price synchronicity and stock price crash risk.

Taking China’s A-share listed companies from 2005 to 2014 and QFII holding shares data as the research sample, this study calculates herding effect index, sock price synchronicity index and stock price crash risk index, and perform linear regression.

This study concludes that, either herding behavior of QFII or the stock price synchronicity can increase the stock price crash risk. Further study reveals that, the herding behavior of QFII also improves the effect of stock price synchronicity on stock price crash risk. Namely, herding behavior of QFII acts as the mediating role between stock price synchronicity and stock price crash risk.

This study empirically analyzes and verifies the mediating roles of herding behavior of QFII in affecting the relation of sock price synchronicity and stock price crash risk for the first time. The findings of this study contribute to the study of the role of QFII in stabilizing Chinese security market.

This paper aims to identify the direct impact of fund style drift on the risk of stock price collapse and the intermediary mechanism of financial risk, so as to better protect the interests of minority investors.

This paper takes all the non-financial companies on the Chinese Growth Enterprise Market from 2011 to 2020 as study object and selects securities investment funds of their top ten circulation stocks to study the relationship between fund style drift and stock price crash risk.

Fund style drift is likely to add stock price crash risk. Financial risk is positively correlated with stock price crash risk. Fund style drift affects stock price crash risk via the mediating effect of financial risk, and fund style drift and financial risk have a marked impact on the stock price crash risk of non-state enterprises, yet a non-significant impact on that of state-owned enterprises.

This paper links fund style drift with stock price crash risk in an exploratory manner and enriches the study perspectives of relationship between institutional investors’ behaviors and stock price crash risk, thus enjoying certain academic value. On the one hand, it furnishes a new approach to the academic frontier issue concerning financial risk and stock price crash risk, and proves that financial risk is positively correlated with stock price crash risk. On the other hand, it regards financial risk as a mediating variable of fund style drift for stock price crash risk and further explores different influencing mechanism of institutional investors’ behaviors.

The purpose of this paper is to test opposing views of the relationship between corporate social responsibility (CSR) and stock price crash risk in a major Asian emerging stock market.

This paper suggests an endogenous relationship between CSR and stock price crash risk. Hence, this paper uses two-stage least squares regression analysis to address the bias and inconsistency associated with endogeneity issues. Moreover, previous studies argue that the level of effectiveness of corporate governance significantly affects firm-specific stock price crash risk. Thus, this paper further divides the overall sample into two sub-samples according to the median of the corporate governance index. Furthermore, this paper investigates the impact of CSR on stock price crash risk under corporate governance.

The empirical results show that CSR significantly mitigates Taiwanese stock price crash risk. This finding is consistent with the notion that socially responsible Taiwanese firms commit to a higher standard of transparency and engage in less bad news hoarding, thus reducing crash risk. The empirical results also show that CSR has a more pronounced effect in mitigating crash risk for Taiwanese firms with less effective corporate governance.

The study findings indicate that CSR plays a more important role in reducing crash risk for Taiwanese firms with weak governance mechanisms.

Since stock return and volatility matters to investors, this study proposes to incorporate the textual sentiment of annual reports in stock price crash risk prediction.

Specific sentences gathered from management discussions and their subsequent analyses are tokenized and transformed into numeric vectors using textual mining techniques, and then the Naïve Bayes method is applied to score the sentiment, which is used as an input variable for crash risk prediction. The results are compared between a collection of predictive models, including linear regression (LR) and machine learning techniques.

The experimental results find that those predictive models that incorporate textual sentiment significantly outperform the baseline models with only accounting and market variables included. These conclusions hold when crash risk is proxied by either the negative skewness of the return distribution or down-to-up volatility (DUVOL).

It should be noted that the authors' study focuses on examining the predictive power of textual sentiment in crash risk prediction, while other dimensions of textual features such as readability and thematic contents are not considered. More analysis is needed to explore the predictive power of textual features from various dimensions, with the most recent sample data included in future studies.

The authors' study provides implications for the information value of textual data in financial analysis and risk management. It suggests that the soft information contained within annual reports may prove informative in crash risk prediction, and the incorporation of textual sentiment provides an incremental improvement in overall predictive performance.