Accounting conservatism quality of accounting information and crash risk of stock prices

Kousenidis, Dimitrios; Ladas, Anestis C.; Negakis, Christos I.

doi:10.1016/j.jeca.2014.09.001

Cited by 20 publications

(13 citation statements)

References 28 publications

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“…According to the existing research, the corporate governance factors influencing the stock price crash risk mainly include internal factors and external factors. Among them, internal governance factors involve senior management [24], the board of directors [25], major shareholders and institutional investors [26], and internal control information disclosure [13,27], etc., external factors-including securities analysts [28], media [29], religion [30] and institutional environment [31], etc.…”

Section: Literature Review and Research Hypothesismentioning

confidence: 99%

Corporate Social Responsibility Disclosure and Stock Price Crash Risk: Evidence from China

Dai

Chao

2019

Sustainability

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We take Chinese A-share listed companies in years 2010–2015 as a sample to examine the relationship between Corporate Social Responsibility (CSR) information disclosure and stock price crash risk using the fixed effect model. The results show that: (1) There is an inverted U-shaped nonlinear relationship between CSR information disclosure and stock price crash risk. That is, as the CSR information disclosure level increases, the CSR information disclosure first aggravates and then reduces the stock price crash risk; (2) under different disclosure motives, there is a significant difference in the impact of CSR information disclosure on stock price crash risk. There is still an inverted U-shaped relationship between mandatory CSR information disclosure and stock price crash risk, but not for the semi-mandatory and voluntary disclosure; (3) the academic independent director has a positive adjustment effect on the relationship between CSR information disclosure and stock price crash risk, while the institutional investor has a negative adjustment effect on the relationship between CSR information disclosure and stock price crash risk. The research is of great significance for promoting the fulfillment of CSR, improving corporate governance and stabilizing the capital market.

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Section: Literature Review and Research Hypothesismentioning

confidence: 99%

Corporate Social Responsibility Disclosure and Stock Price Crash Risk: Evidence from China

Dai

Chao

2019

Sustainability

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“…Other study suggests 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 (Kim & Zhang, 2014). Moreover, Kousenidis, Ladas, and Negakis (2014) report a negative relation between conditional conservatism and future stock price crash risk whereas (Ismail & Elbolok, 2011) and (Nazaripur & Aghaei, 2015) find a negative effect of conditional conservatism on both stock price and quality of earnings. Finally, (Qian, Xian, & Qiaoying, 2020) accounting conservatism, corporate governance and stock price collapse risk are negatively correlated.…”

Section: H 2 : Earnings Quality Is Positively Related To Unconditional Conservatismmentioning

confidence: 97%

Conservatism, Earnings Quality, and Stock Prices - Indonesian Evidence

Krismiaji¹,

Sururi²

2021

JAI

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Research aims: This research investigates the association of conservatism (both conditional and unconditional) with quality of earnings as well as with stock prices on companies listed on the Indonesia Stock Exchange (IDX).Design/Methodology/Approach: The research uses a sample of 846 observations of publicly listed companies on the Indonesian Stock Exchange for the fiscal year that ends on December 31, 2016 through 2018. Conditional conservatism is measured by using an asymmetric timeliness measure from Basu (ATMB). Net income ratio (CFO/NI) is a proxy for earnings quality whereas ratio between market value and book value (MTB) is a measure of unconditional conservatism. The data used in this study are obtained both from Indonesian Stock Exchange database, and from company annual reports.Research findings: The study finds that all companies analyzed implement conservative accounting policies and practices. Besides, quality of earnings and stock prices are negatively associated with conditional conservatism. This research also proves that stock price negatively associated with unconditional conservatism, whereas unconditional conservatism does not associated with earnings quality.Theoretical contribution/ Originality: This study enriches the existing literature about conservatism, especially in emerging market environment. Moreover, this study discusses a set of conservatism that consist of conditional and unconditional conservatism. This may give a complete picture of conservatism practices adopted by Indonesian companies.Practitioner/Policy implication: Since conservatism can solve agency cost problems, the result of this study may affect the way a company produce useful information for interest parties.Research limitation/Implication: The use of the purposive sampling method limits generalizations, because sample designs could not be assumed to characterize all companies listed on IDX.

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“…Investors and regulators have a motivation to minimize crash risk because it is detrimental to the prosperity of shareholders. We also see many studies on stock crashes, especially in the last two decades (e.g., Jin and Myers, 2006 ; Hutton et al., 2009 ; Kousenidis et al., 2014 ; DeFond et al., 2015 ; Kim and Zhang, 2016 ). Those papers explore the factors that cause stock crashes and contextual factors related to stock crashes.…”

Section: Introductionmentioning

confidence: 95%