Abstract
The collapse of stock prices have a huge negative impact on financial markets and the real economy, the mechanism and prevention methods of stock market crashes have become the focus of academic attention. This article takes Chinese A-share listed companies from 2008 to 2016 as samples and investigates the impact of M&A goodwill on the risk of stock price crashes. The study finds that, compared with non-goodwill companies, companies with goodwill have a greater risk of future stock price crashes; with the increase of goodwill value (GW), the risk of future stock price crashes increases significantly. Further research shows that the GW affects the risk of stock price crashes through information asymmetry at the corporate and market levels. This article not only deepens the research on the factors influencing the risk of stock price crashes, but also has great significance in understanding the role of M&A goodwill in the capital market and how to prevent stock price crashes and promote the orderly development of the capital market.
Highlights
As an important way to integrate capital market resources, M&A plays a significant role in improving the efficiency of capital allocation, rapidly expanding the scale of enterprises and enhancing competitiveness
The results show that: (1) Compared with non-goodwill companies, the goodwill companies can significantly increase the risk of future stock price crash; (2) The goodwill value (GW) is positively correlated with the risk of future stock price crash; (3) Further research shows that the multiplier of goodwill and information opacity is positively correlated with the risk of stock price crash, which indicates that the information asymmetry hypothesis has an effective effect on the impact of M&A goodwill on the risk of stock price crash; and (4) The multiplier of goodwill and negative media reports is negatively correlated with the risk of stock price crash, which indicates that the information asymmetry hypothesis effectively acts on the impact of M&A goodwill on the risk of stock price crash
We will use GW Ã AbsACC, the multiplier of goodwill and information opacity, and GW Ã Badnews, the multiplier of goodwill and negative media reports, to carry out regression analysis with two indicators measuring the risk of stock price crash respectively, and jointly explain the mechanism of information asymmetry to aggravate the risk of stock price crash
Summary
As an important way to integrate capital market resources, M&A plays a significant role in improving the efficiency of capital allocation, rapidly expanding the scale of enterprises and enhancing competitiveness. Few scholars have paid attention to the impact of M&A goodwill on stock price crashes. This article investigates the impact of M&A goodwill on the risk of stock price crash by taking A-share listed companies from 2008 to 2016 as samples. The main contributions of this article are as follows: Firstly, the existing research on the risk of stock price crash has not paid enough attention to merger goodwill. This article examines the relationship between goodwill and stock price crash risk, enriching the research in this field. Unlike the previous literature which focuses on one of the internal and market levels, this article studies the mechanism of goodwill’s impact on the risk of stock price crash at the market level and company levels based on the information asymmetry hypothesis
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