Accounting Conservatism and Stock Price Crash Risk: Firm-level Evidence

• 成果类型: Article
• 署名作者: Kim, Jeong-Bon; Zhang, Liandong
• 署名单位: City University of Hong Kong
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1111/1911-3846.12112
• 发表日期: 2016
• 页码: 412-441
• 关键词: earnings quality; information asymmetry; conditional skewness; MARKET; accruals; COMPENSATION; RECOGNITION; Timeliness; regression; returns

摘要

Using a large sample of U.S. firms during 1964-2007, we find that conditional conservatism is associated with a lower likelihood of a firm's future stock price crashes. This finding holds for multiple measures of conditional conservatism and crash risk and is robust to controlling for other known determinants of crash risk and firm-fixed effects. Moreover, we find that the relation between conservatism and crash risk is more pronounced for firms with higher information asymmetry. Overall, our results are consistent with the notion that conditional conservatism limits managers' incentive and ability to overstate performance and hide bad news from investors, which, in turn, reduces stock price crash risk.