M&A goodwill, information asymmetry and stock price crash risk

Wenwu Xie, Congying Ye, Tao Wang and Qitaisong Shen

Economic Research-Ekonomska Istraživanja, 2020, vol. 33, issue 1, 3385-3405

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.

Date: 2020
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DOI: 10.1080/1331677X.2020.1773893

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