Investigating the effect of corporate governance mechanisms on the stock price crash risk

Subject Areas :

فهیمه  صفی خانی ¹ (نویسنده مسئول، استادیار گروه حسابداری، واحد قزوین، دانشگاه آزاد اسلامی، قزوین، ایران. آدرس پست الکترونیکی : [e-mail])
المیرا  محمدخانلو ² (دانشجوی دکتری گروه حسابداری، واحد قزوین ، دانشگاه آزاد اسلامی، قزوین، ایران. مدرس گروه حسابداری دانشگاه آزاد اسلامی واحد تاکستان.)
بهبود  ملکمحمدی ³ (کارشناس ارشد گروه حسابداری، واحد هیدج، دانشگاه آزاد اسلامی، زنجان، ایران.)

Received: 2022-10-11 Accepted : 2022-11-21 Published : 2022-11-22

Keywords: Audit Quality, stock price Crash risk, Key words: ownership structure, board structure,

Abstract :

AbstractThe purpose of this study is to investigate the effect of corporate governance mechanismson the risk of falling stock prices of companies listed on the Tehran Stock Exchange.Corporate governance mechanisms include ownership structure, board structure and auditquality. the dependent variable of this research is the price crash risk and independentvariables including: Ownership concentration , Independence of the board and Auditquality (size of audit, audit fees , Auditor's industry expertise). This research is based onapplied purpose and in terms of nature, descriptive and correlational. In this research,regression analysis (OLS) has been used. The statistical population of this research is allcompanies accepted in Tehran Stock Exchange between 2016 and 2020. Finally, themultivariate regression method has been used using hybrid data. The results of the firsthypothesis showed that ownership concentration has a significant effect on the price crashrisk. The findings of the second hypothesis indicate that the independence of the board hasa significant effect on the price crash risk. The results of the third hypothesis showed thataudit quality has a significant effect on the price crash risk.

References:

منابع
-Andreou, P. C., Antoniou, C., Horton,& J., Louca, C. (2015). Corporate
governance and firm specific stock price crashes. European Financial
Management, 22, 916–956.
-Ashbaugh-Skaife,H., Collins, D., & LaFond, R. (2006).The effects of corporate
governance on firms’ credit ratings. Journal of Accounting and Economics, 42,
203–243 .
-Bahmani., M., & Nezami taheri., S.(2019). Investigating the effects of profit
smoothing on risk reduction Falling stock prices on the Tehran Stock Exchange
Using maximization and minimization approaches, Karafan Quarterly Scientific
Journal, 16 (2), 253-274. (Persian)
- Ball, R., Jayaraman, S., & Shivakumar, L. (2012). Audited financial reporting
& voluntary disclosure as complements:A test of the confirmation hypothesis.
Journal of Accounting and Economics, 53, 136–166.
- Bleck, A., Liu, X. (2007). Market transparency and the accounting regime.
Journal of Accounting Research, 45, 229–256.
- Boyd, B. (1990). Corporate linkages and organizational environment: A test of
the resource dependence model. Strategic Management Journal, 11, 419–430.
- Callen, J. L.,& Fang, X. (2011). Institutional investors and crashes: Monitoring
or expropriation?.Journal of Banking and Finance, 43, 1–13.
-Chen, J., Chan, kam., Dong, Wang.,& Zhang, F, (2016). Internal Control and
Stock Price Crash Risk: Evidence from China, European Accounting Review,26
(1), 1-28
- Hillman, A., Cannella, A., & Paetzold, R. (2002). The resource dependence role
of corporate directors: Strategic adaptation of board composition in response to
environmental change. Journal of Management Studies, 37, 235–256.
- Hotton, A.P., Marc s, A.J.,& Tehranian, H, (2009).Opaque Financial Reports,
R2, and Crash Risk. Journal of Financial Economics. 94, 67-86.
- Jensen, M. (2004). Agency Costs of Free Cash Flow, Corporate Finance and
Takeovers. Journal of American Economic Review .76, 323-329.
- Gerald j, l. Kiridaran, K. Dennis, W.2006,Corporate governance quality &
market liquidity around quarterly earnings announcements.
- Kashi.H.(2020).The Investigating the relationship between CEO power and the
risk of stock price falls with emphasis on the moderating role of ownership
structure and female managers on the board. Journal of New Research Approaches
in Management and Accounting, 32, 118-139. (Persian)
- Kim, J. B. Zhang, L. (2014).Accounting conservatism and stock price crash risk:
firm-level evidence. Journal of Contemporary Accounting Research, 33(1), 412–
441.
26 / ............... بررسی تأثیر ساز وکارهای حاکمیت شرکتی بر ریسک سقوط قیمت سهام
- Koshan, A., Zeynali, M.,& Shamlo,N.(2017). The Investigating the interactive
role of corporate governance on the relationship between stock price
synchronization & stock price risk in companies listed on the Tehran Stock
Exchange, Fourth National Conference on Accounting. (Persian)
- Kothari, S.P., Shu, S. & Wysocki, P.D. (2009). Do managers withhold bad
news? .Journal of Accounting Research. 47 (1), 241-276.
- Krishnan,G. V. (2003). Audit Quality and the Pricing of Discretionary Accrual
.Auditing: A Journal of Practice &Theory, 22,.109 -126.
- Kyeongmin, J. (2019).Corporate Governance and Stock Price Crash Risk.
Academy of Accounting and Financial Studies Journal. 23 (4), ISSN: 1096-3685;
Online ISSN: 1528-2635.
- Masoumi, R.,Neshagaran, M. (2022). Investigating the effect of corporate
governance and corporate social responsibility on the risk of falling stock prices
of companies. Journal of Research and Studies of Islamic Sciences, 3(24), 73-85.
(Persian)
- Newman, D. P., Patterson, E. R., & Smith, J. R. (2005). The role of auditing in
investor protection. Accounting Review, 80, 289–313.
- Panayiotis, C. A., Constantinos, A., Joanne,& H. L. Christodoulos. (2016).
Corporate Governance and Firm-Specific Stock Price Crashes, 22(5), 916-956.
- Sedighei, R.(2011). The Relationship between board structure and accounting
profit information content. Empirical studies of financial accounting Journal.
37(11), 99-125. (Persian)
-Tanaee, M.,Sedeghi,A.,& Amiri, A.(2015). The Investigating the role of some
corporate governance mechanisms in reducing the risk of falling stock prices of
companies listed on the Tehran Stock Exchange. Journal of Financial Sciencem,
4(11), 31-50. (Persian)
-Vadeie noghabe, M., & Rostami, A.(2014).The Investigating the effect of
institutional ownership on the risk of future stock price falls in companies listed
on the Tehran Stock Exchange. Journal of Financial Accounting. 23(6), 43-66 .
(Persian)
-Yeung, W, H., & Lento, C.(2018).Ownership structure, audit quality, board
structure, and stock price crash risk: Evidence from China.global financial journal
.37, 1-24.

_||_

منابع
-Andreou, P. C., Antoniou, C., Horton,& J., Louca, C. (2015). Corporate
governance and firm specific stock price crashes. European Financial
Management, 22, 916–956.
-Ashbaugh-Skaife,H., Collins, D., & LaFond, R. (2006).The effects of corporate
governance on firms’ credit ratings. Journal of Accounting and Economics, 42,
203–243 .
-Bahmani., M., & Nezami taheri., S.(2019). Investigating the effects of profit
smoothing on risk reduction Falling stock prices on the Tehran Stock Exchange
Using maximization and minimization approaches, Karafan Quarterly Scientific
Journal, 16 (2), 253-274. (Persian)
- Ball, R., Jayaraman, S., & Shivakumar, L. (2012). Audited financial reporting
& voluntary disclosure as complements:A test of the confirmation hypothesis.
Journal of Accounting and Economics, 53, 136–166.
- Bleck, A., Liu, X. (2007). Market transparency and the accounting regime.
Journal of Accounting Research, 45, 229–256.
- Boyd, B. (1990). Corporate linkages and organizational environment: A test of
the resource dependence model. Strategic Management Journal, 11, 419–430.
- Callen, J. L.,& Fang, X. (2011). Institutional investors and crashes: Monitoring
or expropriation?.Journal of Banking and Finance, 43, 1–13.
-Chen, J., Chan, kam., Dong, Wang.,& Zhang, F, (2016). Internal Control and
Stock Price Crash Risk: Evidence from China, European Accounting Review,26
(1), 1-28
- Hillman, A., Cannella, A., & Paetzold, R. (2002). The resource dependence role
of corporate directors: Strategic adaptation of board composition in response to
environmental change. Journal of Management Studies, 37, 235–256.
- Hotton, A.P., Marc s, A.J.,& Tehranian, H, (2009).Opaque Financial Reports,
R2, and Crash Risk. Journal of Financial Economics. 94, 67-86.
- Jensen, M. (2004). Agency Costs of Free Cash Flow, Corporate Finance and
Takeovers. Journal of American Economic Review .76, 323-329.
- Gerald j, l. Kiridaran, K. Dennis, W.2006,Corporate governance quality &
market liquidity around quarterly earnings announcements.
- Kashi.H.(2020).The Investigating the relationship between CEO power and the
risk of stock price falls with emphasis on the moderating role of ownership
structure and female managers on the board. Journal of New Research Approaches
in Management and Accounting, 32, 118-139. (Persian)
- Kim, J. B. Zhang, L. (2014).Accounting conservatism and stock price crash risk:
firm-level evidence. Journal of Contemporary Accounting Research, 33(1), 412–
441.
26 / ............... بررسی تأثیر ساز وکارهای حاکمیت شرکتی بر ریسک سقوط قیمت سهام
- Koshan, A., Zeynali, M.,& Shamlo,N.(2017). The Investigating the interactive
role of corporate governance on the relationship between stock price
synchronization & stock price risk in companies listed on the Tehran Stock
Exchange, Fourth National Conference on Accounting. (Persian)
- Kothari, S.P., Shu, S. & Wysocki, P.D. (2009). Do managers withhold bad
news? .Journal of Accounting Research. 47 (1), 241-276.
- Krishnan,G. V. (2003). Audit Quality and the Pricing of Discretionary Accrual
.Auditing: A Journal of Practice &Theory, 22,.109 -126.
- Kyeongmin, J. (2019).Corporate Governance and Stock Price Crash Risk.
Academy of Accounting and Financial Studies Journal. 23 (4), ISSN: 1096-3685;
Online ISSN: 1528-2635.
- Masoumi, R.,Neshagaran, M. (2022). Investigating the effect of corporate
governance and corporate social responsibility on the risk of falling stock prices
of companies. Journal of Research and Studies of Islamic Sciences, 3(24), 73-85.
(Persian)
- Newman, D. P., Patterson, E. R., & Smith, J. R. (2005). The role of auditing in
investor protection. Accounting Review, 80, 289–313.
- Panayiotis, C. A., Constantinos, A., Joanne,& H. L. Christodoulos. (2016).
Corporate Governance and Firm-Specific Stock Price Crashes, 22(5), 916-956.
- Sedighei, R.(2011). The Relationship between board structure and accounting
profit information content. Empirical studies of financial accounting Journal.
37(11), 99-125. (Persian)
-Tanaee, M.,Sedeghi,A.,& Amiri, A.(2015). The Investigating the role of some
corporate governance mechanisms in reducing the risk of falling stock prices of
companies listed on the Tehran Stock Exchange. Journal of Financial Sciencem,
4(11), 31-50. (Persian)
-Vadeie noghabe, M., & Rostami, A.(2014).The Investigating the effect of
institutional ownership on the risk of future stock price falls in companies listed
on the Tehran Stock Exchange. Journal of Financial Accounting. 23(6), 43-66 .
(Persian)
-Yeung, W, H., & Lento, C.(2018).Ownership structure, audit quality, board
structure, and stock price crash risk: Evidence from China.global financial journal
.37, 1-24.