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Does the Change in Financial Statement Format Influence Stock Price Crash Risk?

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Listed:
  • Qinqin Wu

    (Accounting School, Chongqing University of Technology, Chongqing 400054, China)

  • Manjing Xiao

    (Accounting School, Chongqing University of Technology, Chongqing 400054, China)

  • Wenli Zuo

    (Accounting School, Chongqing University of Technology, Chongqing 400054, China)

  • Lingling Dai

    (Accounting School, Chongqing University of Technology, Chongqing 400054, China)

  • Ping Cheng

    (Accounting School, Chongqing University of Technology, Chongqing 400054, China)

Abstract

By employing the 2017 reform of China’s financial statement presentation as an exogenous shock, we evaluate how the change shapes the likelihood of stock price crashes. Our analysis indicates that firms affected by the reform exhibit notably higher crash risk after the new reporting format is adopted, and this finding remains consistent across multiple robustness checks. The increase in crash risk can be largely attributed to managerial incentives to manage earnings by reclassifying held-for-sale assets and other special items. Moreover, the reform exerts a stronger effect on firms that exhibit poor information transparency and receive little oversight from internal and external monitors.

Suggested Citation

  • Qinqin Wu & Manjing Xiao & Wenli Zuo & Lingling Dai & Ping Cheng, 2025. "Does the Change in Financial Statement Format Influence Stock Price Crash Risk?," IJFS, MDPI, vol. 13(4), pages 1-22, December.
    • Handle: RePEc:gam:jijfss:v:13:y:2025:i:4:p:244-:d:1819726
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