IDEAS home Printed from https://ideas.repec.org/a/bla/acctfi/v65y2025i2p2035-2064.html

Visual annual reports and stock price crash risk

Author

Listed:
  • Rui Xiang
  • Congmin Song
  • Rongyu Lin
  • Lu Shen

Abstract

Using a sample of Chinese A‐Share listed companies during 2018–2023, we explore the influence of visual annual reports (VARs) on stock price crash risk. The results suggest that VARs are negatively associated with crash risk, and several robustness and endogeneity examinations validate our primary findings. Mechanism analyses reveal that reduced information asymmetry and increased internal control quality may serve as potential pathways through which VARs influence crash risk. Additionally, cross‐sectional examinations suggest that the negative relation between VARs and crash risk is more pronounced for companies with poor annual report readability and limited external monitoring.

Suggested Citation

  • Rui Xiang & Congmin Song & Rongyu Lin & Lu Shen, 2025. "Visual annual reports and stock price crash risk," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 65(2), pages 2035-2064, June.
    • Handle: RePEc:bla:acctfi:v:65:y:2025:i:2:p:2035-2064
    DOI: 10.1111/acfi.13402
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/acfi.13402
    Download Restriction: no
    File URL: https://libkey.io/10.1111/acfi.13402?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Chen, Joseph & Hong, Harrison & Stein, Jeremy C., 2001. "Forecasting crashes: trading volume, past returns, and conditional skewness in stock prices," Journal of Financial Economics, Elsevier, vol. 61(3), pages 345-381, September.
    2. Ertugrul, Mine & Lei, Jin & Qiu, Jiaping & Wan, Chi, 2017. "Annual Report Readability, Tone Ambiguity, and the Cost of Borrowing," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 52(2), pages 811-836, April.
    3. Wei Xu & Zhenye Yao & Donghua Chen, 2019. "Chinese annual report readability: measurement and test," China Journal of Accounting Studies, Taylor & Francis Journals, vol. 7(3), pages 407-437, July.
    4. Minghui Yang & Shaoming Chen & Jiawen Wang & Yan Wang, 2023. "Corporate social responsibility and stock price crash risk: does analyst coverage matter?," Applied Economics, Taylor & Francis Journals, vol. 55(10), pages 1045-1061, February.
    5. Jeong†Bon Kim & Liandong Zhang, 2016. "Accounting Conservatism and Stock Price Crash Risk: Firm†level Evidence," Contemporary Accounting Research, John Wiley & Sons, vol. 33(1), pages 412-441, March.
    6. Rajgopal, Shiva & Venkatachalam, Mohan, 2011. "Financial reporting quality and idiosyncratic return volatility," Journal of Accounting and Economics, Elsevier, vol. 51(1-2), pages 1-20, February.
    7. Tim Loughran & Bill Mcdonald, 2016. "Textual Analysis in Accounting and Finance: A Survey," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 54(4), pages 1187-1230, September.
    8. Kun Su, 2022. "Religion, government intervention and crash risk: lessons from China," Applied Economics, Taylor & Francis Journals, vol. 54(43), pages 4930-4951, September.
    9. Jane Davison, 2015. "Visualising accounting: an interdisciplinary review and synthesis," Accounting and Business Research, Taylor & Francis Journals, vol. 45(2), pages 121-165, February.
    10. Alexander Nekrasov & Siew Hong Teoh & Shijia Wu, 2022. "Visuals and attention to earnings news on twitter," Review of Accounting Studies, Springer, vol. 27(4), pages 1233-1275, December.
    11. Hutton, Amy P. & Marcus, Alan J. & Tehranian, Hassan, 2009. "Opaque financial reports, R2, and crash risk," Journal of Financial Economics, Elsevier, vol. 94(1), pages 67-86, October.
    12. Alexander Bleck & Xuewen Liu, 2007. "Market Transparency and the Accounting Regime," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 45(2), pages 229-256, May.
    13. Sreedhar T. Bharath & Paolo Pasquariello & Guojun Wu, 2009. "Does Asymmetric Information Drive Capital Structure Decisions?," The Review of Financial Studies, Society for Financial Studies, vol. 22(8), pages 3211-3243, August.
    14. S. P. Kothari & Susan Shu & Peter D. Wysocki, 2009. "Do Managers Withhold Bad News?," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 47(1), pages 241-276, March.
    15. Xi Fu & Xiaoxi Wu & Zhifang Zhang, 2021. "The Information Role of Earnings Conference Call Tone: Evidence from Stock Price Crash Risk," Journal of Business Ethics, Springer, vol. 173(3), pages 643-660, October.
    16. Alexander Dyck & Natalya Volchkova & Luigi Zingales, 2008. "The Corporate Governance Role of the Media: Evidence from Russia," Journal of Finance, American Finance Association, vol. 63(3), pages 1093-1135, June.
    17. Yanjian Zhu & Zhaoying Wu & Hua Zhang & Jing Yu, 2017. "Media sentiment, institutional investors and probability of stock price crash: evidence from Chinese stock markets," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 57(5), pages 1635-1670, December.
    18. Moriarity, S, 1979. "Communicating Financial Information Through Multidimensional Graphics," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 17(1), pages 205-224.
    19. Velury, Uma & Jenkins, David S., 2006. "Institutional ownership and the quality of earnings," Journal of Business Research, Elsevier, vol. 59(9), pages 1043-1051, September.
    20. Yekini, Liafisu Sina & Wisniewski, Tomasz Piotr & Millo, Yuval, 2016. "Market reaction to the positiveness of annual report narratives," The British Accounting Review, Elsevier, vol. 48(4), pages 415-430.
    21. Min Zhang & Lu Xie & Haoran Xu, 2016. "Corporate Philanthropy and Stock Price Crash Risk: Evidence from China," Journal of Business Ethics, Springer, vol. 139(3), pages 595-617, December.
    22. Zunxin Zheng & Donghui Li & Tingyong Zhong & Tian Wang & Ling He, 2023. "CEO facial structure and stock price crash risk," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(S1), pages 873-905, April.
    23. Stock, D & Watson, Cj, 1984. "Human Judgment Accuracy, Multidimensional Graphics, And Humans Versus Models," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 22(1), pages 192-206.
    24. William J. Bazley & Henrik Cronqvist & Milica Mormann, 2021. "Visual Finance: The Pervasive Effects of Red on Investor Behavior," Management Science, INFORMS, vol. 67(9), pages 5616-5641, September.
    25. Jin, Li & Myers, Stewart C., 2006. "R2 around the world: New theory and new tests," Journal of Financial Economics, Elsevier, vol. 79(2), pages 257-292, February.
    26. Blau, Benjamin M. & DeLisle, Jared R. & Price, S. McKay, 2015. "Do sophisticated investors interpret earnings conference call tone differently than investors at large? Evidence from short sales," Journal of Corporate Finance, Elsevier, vol. 31(C), pages 203-219.
    27. Tim Loughran & Bill Mcdonald, 2014. "Measuring Readability in Financial Disclosures," Journal of Finance, American Finance Association, vol. 69(4), pages 1643-1671, August.
    28. Claude Francoeur & Yuntian Li & Zvi Singer & Jing Zhang, 2023. "Earnings forecasts of female CEOs: quality and consequences," Review of Accounting Studies, Springer, vol. 28(3), pages 1721-1764, September.
    29. Chen, Tao & Harford, Jarrad & Lin, Chen, 2015. "Do analysts matter for governance? Evidence from natural experiments," Journal of Financial Economics, Elsevier, vol. 115(2), pages 383-410.
    30. Alexander Dyck & Adair Morse & Luigi Zingales, 2010. "Who Blows the Whistle on Corporate Fraud?," Journal of Finance, American Finance Association, vol. 65(6), pages 2213-2253, December.
    31. Jace Garrett & Rani Hoitash & Douglas F. Prawitt, 2014. "Trust and Financial Reporting Quality," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 52(5), pages 1087-1125, December.
    32. Bushman, Robert M. & Smith, Abbie J., 2001. "Financial accounting information and corporate governance," Journal of Accounting and Economics, Elsevier, vol. 32(1-3), pages 237-333, December.
    33. Rajgopal, Shiva & Venkatachalam, Mohan, 2011. "Financial reporting quality and idiosyncratic return volatility," Journal of Accounting and Economics, Elsevier, vol. 51(1), pages 1-20.
    34. Liu, Yurou, 2023. "Judicial independence and crash risk: Evidence from a natural experiment in China," Journal of Corporate Finance, Elsevier, vol. 83(C).
    35. Chen, Changling & Kim, Jeong-Bon & Yao, Li, 2017. "Earnings smoothing: Does it exacerbate or constrain stock price crash risk?," Journal of Corporate Finance, Elsevier, vol. 42(C), pages 36-54.
    36. Kim, Jeong-Bon & Li, Yinghua & Zhang, Liandong, 2011. "CFOs versus CEOs: Equity incentives and crashes," Journal of Financial Economics, Elsevier, vol. 101(3), pages 713-730, September.
    37. Feng, Mei & Li, Chan & McVay, Sarah, 2009. "Internal control and management guidance," Journal of Accounting and Economics, Elsevier, vol. 48(2-3), pages 190-209, December.
    38. Blankespoor, Elizabeth & deHaan, Ed & Marinovic, Iván, 2020. "Disclosure processing costs, investors’ information choice, and equity market outcomes: A review," Journal of Accounting and Economics, Elsevier, vol. 70(2).
    39. Callen, Jeffrey L. & Fang, Xiaohua, 2015. "Short interest and stock price crash risk," Journal of Banking & Finance, Elsevier, vol. 60(C), pages 181-194.
    40. Kristina Rennekamp, 2012. "Processing Fluency and Investors’ Reactions to Disclosure Readability," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 50(5), pages 1319-1354, December.
    41. Healy, Paul M. & Palepu, Krishna G., 2001. "Information asymmetry, corporate disclosure, and the capital markets: A review of the empirical disclosure literature," Journal of Accounting and Economics, Elsevier, vol. 31(1-3), pages 405-440, September.
    42. Rosiatimah Mohd Isa, 2006. "Graphical Information in Corporate Annual Report: A Survey of Users and Preparers Perceptions," Journal of Financial Reporting and Accounting, Emerald Group Publishing Limited, vol. 4(1), pages 39-59, January.
    43. Hu, Juncheng & Li, Xiaorong & Duncan, Keith & Xu, Jia, 2020. "Corporate relationship spending and stock price crash risk: Evidence from China's anti-corruption campaign," Journal of Banking & Finance, Elsevier, vol. 113(C).
    44. Kim, Jeong-Bon & Li, Yinghua & Zhang, Liandong, 2011. "Corporate tax avoidance and stock price crash risk: Firm-level analysis," Journal of Financial Economics, Elsevier, vol. 100(3), pages 639-662, June.
    45. Jeong†Bon Kim & Liandong Zhang, 2014. "Financial Reporting Opacity and Expected Crash Risk: Evidence from Implied Volatility Smirks," Contemporary Accounting Research, John Wiley & Sons, vol. 31(3), pages 851-875, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pranav Agrawal & Yongjie Zhuang & Rohan Sinha & Sachit Murthy & Sriram Narasimhan, 2026. "Optimal Sensor Placement for Acoustic Leak Pinpointing in Water Distribution Networks," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 40(1), pages 1-23, January.
    2. Niu, Yan & Du, Dan, 2025. "Comparability of accounting information, financialization level, and corporate stock price crash risk," Finance Research Letters, Elsevier, vol. 85(PE).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hao, Jing & Sun, Ran & Gong, Xu & Zhu, Xiaoyu (Ross), 2025. "ESG and stock price crash risk revisited: Evidence from mandatory ESG disclosure policy in China," Pacific-Basin Finance Journal, Elsevier, vol. 91(C).
    2. Dong, Wenyi & Gao, Xin & Li, Donghui & Yang, Shijie, 2024. "Information centralization and stock price crash risk: Cross-country evidence," International Review of Financial Analysis, Elsevier, vol. 96(PA).
    3. Meng, Qingxi & He, Yan & Zhang, Anting & Gong, Xiaoyun, 2023. "Does mandatory operating information disclosure affect stock price crash risk? Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 82(C).
    4. Pham, Man Duy (Marty) & Nguyen, Thu Ha, 2024. "When a gift resembles a trojan horse: CEO stock gift and stock price crash risk," The British Accounting Review, Elsevier, vol. 56(4).
    5. Lu, Xian-wei & Fung, Hung-Gay & Su, Zhong-qin, 2018. "Information leakage, site visits, and crash risk: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 58(C), pages 487-507.
    6. Chen Chen & Ting‐Chiao Huang & Mukesh Garg & Mehdi Khedmati, 2021. "Governments as customers: Exploring the effects of government customers on supplier firms’ information quality," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 48(9-10), pages 1630-1667, October.
    7. Wu, Kai & Lai, Seiwai, 2020. "Intangible intensity and stock price crash risk," Journal of Corporate Finance, Elsevier, vol. 64(C).
    8. Zhuo, Qianru & Lin, Yuanfeng & Qiu, Yajie & Shen, Zhe & Wang, Zhiqiang, 2024. "Employment protection and stock price crash risk: Evidence from China’s introduction of the labor contract law," Research in International Business and Finance, Elsevier, vol. 71(C).
    9. Jincheol Bae & Jaehong Lee & Eunsoo Kim, 2019. "Does Fixed Asset Revaluation Build Trust between Management and Investors?," Sustainability, MDPI, vol. 11(13), pages 1-22, July.
    10. Chung, Chune Young & Thi Ngoc Dung, Pham & Liu, Chang, 2024. "Institutional blockholder monitoring and stock price crash risk," The Quarterly Review of Economics and Finance, Elsevier, vol. 98(C).
    11. Andreou, Christoforos K. & Andreou, Panayiotis C. & Lambertides, Neophytos, 2021. "Financial distress risk and stock price crashes," Journal of Corporate Finance, Elsevier, vol. 67(C).
    12. Thomas R. Kubick & G. Brandon Lockhart, 2021. "Industry tournament incentives and stock price crash risk," Financial Management, Financial Management Association International, vol. 50(2), pages 345-369, June.
    13. Xu, Lin & Rao, Yulei & Cheng, Yingmei & Wang, Jianxin, 2020. "Internal coalition and stock price crash risk," Journal of Corporate Finance, Elsevier, vol. 64(C).
    14. Leilei Gu & Jinyu Liu & Yuchao Peng, 2022. "Locality Stereotype, CEO Trustworthiness and Stock Price Crash Risk: Evidence from China," Journal of Business Ethics, Springer, vol. 175(4), pages 773-797, February.
    15. Ji, Qiong & Quan, Xiaofeng & Yin, Hongying & Yuan, Qingbo, 2021. "Gambling preferences and stock price crash risk: Evidence from China," Journal of Banking & Finance, Elsevier, vol. 128(C).
    16. Lu, Jing & Qiu, Yuhang, 2023. "Does non-punitive regulation diminish stock price crash risk?," Journal of Banking & Finance, Elsevier, vol. 148(C).
    17. Liao, Lin & Sharma, Divesh & Yang, Yitang (Jenny) & Zhao, Rui, 2023. "Adoption and content of key audit matters and stock price crash risk," International Review of Financial Analysis, Elsevier, vol. 88(C).
    18. Deng, Xiaohu & Gao, Lei & Kim, Jeong-Bon, 2020. "Short-sale constraints and stock price crash risk: Causal evidence from a natural experiment," Journal of Corporate Finance, Elsevier, vol. 60(C).
    19. Yang, Jun & Lu, Jing & Xiang, Cheng, 2020. "Company visits and stock price crash risk: Evidence from China," Emerging Markets Review, Elsevier, vol. 44(C).
    20. Choi, Young Mok & Park, Kunsu, 2022. "Zero-leverage policy and stock price crash risk: Evidence from Korea," International Review of Financial Analysis, Elsevier, vol. 81(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:acctfi:v:65:y:2025:i:2:p:2035-2064. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/aaanzea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.