Impact of Financial Constraint on Stock Price Crash Risk with an Emphasis on Discretionary Accruals

Document Type : Research Paper


1 Associate Prof. of Accounting, Marand Branch, Islamic Azad University, Marand, Iran

2 Ph.D. Student of Accounting, Marand Branch, Islamic Azad University, Marand, Iran


Objective: The purpose of this study is to investigate the effect of financial constraint on stock price crash risk with an emphasis on discretionary accruals in listed companies in the Tehran Stock Exchange.
Methods: In this regard, 110 companies were selected for the period of 2010-2016. A panel data approach has been used to test of research hypotheses.
Results: The results show that financial constraints affect stock price crash risk. This means that financial constraints related to stock price crash risk with bad news hording and eventually stock price crash risk. Also, the sample companies were divided into groups of companies with discretionary accruals, up and down. Finally, the results show that positive impact of financial constraints on stock price crash risk is higher in companies with high accruals.
Conclusion: According to the findings, the results are consistent with the agency theory.


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