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Related party M&A, goodwill impairment and stock price crash risk: Evidence from Chinese capital market

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  • Xu, Lingjuan
  • Zhang, Bindan
  • Huynh, Luu Duc Toan
  • Dai, Peng-Fei

Abstract

This article takes A-share market M&A cases from 2010 to 2022 as samples to investigate the influence mechanism of related M&A, goodwill impairment and the risk of the stock price crash, and the differences of the above effects in different industries. The study finds that related M&A presents a higher premium rate in the asset-light industry, which deepens the risk of goodwill impairment and brings a greater stock price crash risk. Further research shows that frequent related M&A behavior deepen the positive correlation between goodwill impairment and stock price crash risk. The enhancement effect is pronounced in the asset-light industry. This paper deepens the comprehensive understanding of related M&A and enriches the related research on goodwill impairment, which makes it specific reference value to small and medium investors.

Suggested Citation

  • Xu, Lingjuan & Zhang, Bindan & Huynh, Luu Duc Toan & Dai, Peng-Fei, 2024. "Related party M&A, goodwill impairment and stock price crash risk: Evidence from Chinese capital market," International Review of Financial Analysis, Elsevier, vol. 95(PC).
    • Handle: RePEc:eee:finana:v:95:y:2024:i:pc:s105752192400396x
    DOI: 10.1016/j.irfa.2024.103464
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