Financial Environment and Risk of Stock Price Crash

Abstract

The risk of stock price crash has become an important topic in the field of macroeconomics and micro-finance in recent years, but there are relatively few researches on the risk of stock price crash from an external perspective. Therefore, this paper takes China’s GEM listed companies as samples to empirically test the impact of financial environment on stock price crash risk. The research finds that there is a significant negative correlation between the financial environment and the risk of stock price crash, that is, the better the financial environment of the GEM listed company is, the lower the risk of stock price crash is. This conclusion still exists after controlling for the conservatism and endogenicity.