Independent Directors' Opposition, Earnings Management and the Risk of Stock Price Crash

In recent years, stock price crash events have occurred from time to time, resulting in the unstable operation of the capital market. The risk of stock price crash has drawn wide attention from all walks of life. This paper examines the data of A-share listed companies from 2007 to 2021 to study the impact of independent directors' dissenting opinions on the risk of stock price crash. The study found that the independent directors' dissenting opinions were negatively correlated with the risk of a stock price crash, and this conclusion was still valid after a series of robustness tests. The mechanism analysis shows that the independent directors' objection can exert the governance effect, restrain the abnormal related party transactions and earnings management behavior of the majority shareholders, and thus reduce the risk of corporate stock price crash. The above results are consistent with the logic that independent directors exert signaling and governance effects by expressing dissenting opinions to control the risk of stock price collapse. This conclusion has certain significance for preventing the risk of stock price collapse and promoting the stable development of capital market.