Financial reporting opacity and expected crash risk: Evidence from implied volatility smirks

• Main Authors: KIM, Jeong-Bon, ZHANG, Liandong
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2014
• Subjects: Financial Reporting Opacity; Expected Crash Risk; Implied Volatility Smirk; Internal Control Weakness; Restatements; Accounting; Corporate Finance
• Online Access: https://ink.library.smu.edu.sg/soa_research/1702; https://ink.library.smu.edu.sg/context/soa_research/article/2729/viewcontent/FinancialReportingOpacity_2013_pp.pdf
• Institution: Singapore Management University

The recent financial crisis has stimulated a renewed interest in understanding the determinants of stock price crash risk (i.e., left tail risk). Recent research shows that opaque financial reports enable managers to hide and accumulate bad news for extended periods. When the accumulated bad news re...