Understanding Stock Price Crashes: The Influence of Goodwill and Economic Policy Uncertainty
This study examines the impact of goodwill and its impairment on stock price crash risk. While prior research has explored the role of intangible assets in crash risk, this study focuses specifically on goodwill due to its discretionary accounting treatment, which creates information asymmetry be...
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| פורמט: | Article ou chapitre numérique |
| שפה: | Français |
| יצא לאור: |
2026
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| גישה מקוונת: | Accès Université d'Orléans et IFPM Accès Université d'Orléans et IFPM |
| סיכום: | This study examines the impact of goodwill and its impairment on stock price crash risk. While prior research has explored the role of intangible assets in crash risk, this study focuses specifically on goodwill due to its discretionary accounting treatment, which creates information asymmetry between managers and investors, a key driver of crash risk. Using a dataset of 40,046 observations from U.S.-listed firms between 2003 and 2020, the findings reveal that the magnitude of goodwill on the balance sheet increases crash risk, whereas its mere presence or relatively small values do not. Moreover, firms that repeatedly impair goodwill reduce information asymmetry by gradually disclosing value-relevant information, enhancing transparency and predictability, thereby reducing crash risk. However, the effect of goodwill on crash risk is contingent on economic and policy uncertainty, as it becomes significant only during periods of heightened uncertainty. Additionally, other long-term assets impact crash risk differently depending on the macroeconomic context. Overall, the study underscores the importance of specific accounting items in shaping stock price crash risk, demonstrating that both balance sheet composition and financial reporting practices influence this risk, though their effects vary with macroeconomic conditions.
JEL Classification: G14, G32, M41
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