Corporate Financing Constraints and Stock Price Crash Risk based on Overinvestment Perspective

Abstract

As an anomaly in the capital market, the frequent occurrence of domestic and foreign stock price crashes can bring great impact on the stability of the market and economic development. The causes have also become an important topic of research for scholars, and this paper uses data of A-share listed companies of China in 2018 to study the impact of financing constraints on the risk of stock price crashes. The results show that the degree of financing constraints is significantly and negatively related to the risk of stock price collapse, i.e., the higher the degree of financing constraints, the lower the risk of stock price collapse. The findings can not only enrich the literature on stock price crash risk, financing constraints and other related fields, but also have important reference value for reducing stock price crash risk and promoting the healthy and stable development of China's capital market.