Author(s)

Bo Liu ¹, Wenxin Guan ¹

Affiliation(s)

¹ School of Accounting, Anhui University of Finance and Economics, Bengbu, Anhui Province, 233030, China

Corresponding Author

Wenxin Guan

ABSTRACT

In recent years, annual report tone has become one of the stock price volatility factors, and the excessive control of management's tone discretion under the agency problem has gradually become a risk factor threatening the stability of financial markets. Based on this, a study sample of A-share listed companies in China from 2007 to 2020 was used to empirically analyse whether annual report tone would lead to the risk of share price collapse. It is found that: firms with low information transparency tend to have a more positive annual report tone, while the positive tone tendency of annual reports shows a positive correlation with the risk of share price collapse, indicating that there is intentional management behaviour of manipulating tone among listed companies in China. Compared to companies with a higher degree of internal control, companies with a lower degree of internal control have a more significant positive correlation between positive annual report tone and share price crash analysis. Clarifying the internal logic and mechanism of the risk of share price collapse due to the tone of annual reports is an important insight for further understanding tone manipulation, strengthening the construction of internal control system, enhancing the regulation of accounting information disclosure and maintaining the stability of financial markets.

KEYWORDS

Data mining, annual report text analysis, tone manipulation, share price collapse risk, internal control

CITE THIS PAPER

Wenxin Guan, Bo Liu, Annual Report Tone, Internal Controls and the Risk of Share Price Collapse--Empirical evidence from A-share listed companies in China. Journal of Sociology and Ethnology (2022) Vol. 4: 45-55. DOI: http://dx.doi.org/10.23977/jsoce.2022.040306.

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