Does Internal Control Reduce Firms’ Stock Price Crash Risk? Evidence from China

Siru A; Zefeng Huang; Junhao Wang

doi:10.2991/assehr.k.211209.399

<Previous Article In Volume

Next Article In Volume>

Does Internal Control Reduce Firms’ Stock Price Crash Risk? Evidence from China

Authors

Siru A¹^{, a,†}, Zefeng Huang²^{, b}^{, †}, Junhao Wang³^{, c}^{, †}

¹School of applied mathematics, Beijing University of Technology, Beijing, 100020, China

²School of financial, Shanghai University, Shanghai,201900, China

³School of Managerial Economics, University of California, Davis, 95616, U.S.

^b

huangzf@shu.edu.cn

^c

uagwang@ucdavis.edu

^†

These authors contributed equally.

^*Corresponding author. Email:^a 17062110@bjut.edu.cn

Corresponding Author

Siru A

Available Online 15 December 2021.

DOI: 10.2991/assehr.k.211209.399 How to use a DOI?
Keywords: stock price crash risk; internal control; Chinese firms; robustness checks; size of the firms; institutional ownership
Abstract: Under a unique setting in China, the success of internal control is dependent upon whether the informational and disciplinary role it serves effectively manages risks. Using the data from the China Stock Market & Accounting Research database and Dibo databases, the relationship between internal control and stock price crash risk of the firms is investigated. Our empirical results from the regression model show that there is a negative correlation between the price crash risk and the internal control. After two robustness checks, including alternative measures and multi-fixed effects model analysis, the same results are obtained as before. Furthermore, our heterogeneity analysis shows that the effect of internal control is much more significant on small-cap firms and firms with low institutional ownership. Collectively, our findings suggest that the importance of internal control on firm governance helps reduce stock price crash risk.
Open Access: This is an open access article under the CC BY-NC license.

Download article (PDF)

<Previous Article In Volume

Next Article In Volume>

Volume Title: Proceedings of the 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021)
Series: Advances in Economics, Business and Management Research
Publication Date: 15 December 2021
ISBN: 978-94-6239-483-4
ISSN: 2352-5428
DOI: 10.2991/assehr.k.211209.399 How to use a DOI?
Open Access: This is an open access article under the CC BY-NC license.

Cite this article

ris enw bib

TY  - CONF
AU  - Siru A
AU  - Zefeng Huang
AU  - Junhao Wang
PY  - 2021
DA  - 2021/12/15
TI  - Does Internal Control Reduce Firms’ Stock Price Crash Risk? Evidence from China
BT  - Proceedings of the 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021)
PB  - Atlantis Press
SP  - 2442
EP  - 2451
SN  - 2352-5428
UR  - https://doi.org/10.2991/assehr.k.211209.399
DO  - 10.2991/assehr.k.211209.399
ID  - A2021
ER  -

download .riscopy to clipboard