 Available-for-sale is available for hoarding: When nonfinancial firms hold financial assetsXiaoran Ni, Yuchao Peng, Ji Shen, Samuel A. Vigne and Nanxuan Wang Journal of Banking & Finance, 2025, vol. 171, issue C Abstract: This paper empirically examines how listed non-financial firms use the “call option” feature of one of the most important financial assets, available-for-sale securities, as earnings manipulation tools owing to bad-news-hoarding motives. In 2007, China set its first accounting standards for financial instruments, which classify financial assets based on the highly subjective “managerial holding intention” criterion. We find that holding available-for-sale securities is positively associated with the likelihood of stock price crashes in Chinese listed firms. The main effect is more pronounced under lax external regulation and lower information transparency. It is further accentuated when CEOs have lower educational backgrounds, weaker competence in managing core business activities, or face greater performance pressures. Our findings indicate that, in typical emerging markets, fair value accounting may have unintended consequences, inducing non-financial firms to employ financial assets as tools to hoard bad news. Keywords: Available-for-sale securities; Bad news hoarding; Stock price crash risk; Earnings manipulation; Fair value accounting (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:171:y:2025:i:c:s0378426624002620 DOI: 10.1016/j.jbankfin.2024.107348 Access Statistics for this article Journal of Banking & Finance is currently edited by Ike Mathur More articles in Journal of Banking & Finance from Elsevier |
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