Lately, Intangible Intensity and Stock Price Crash Risk, a paper co-authored by our school’s Lecturer Wu Kai and 2018 international postgraduate student Serwai Lai, was officially accepted by Journal of Corporate Finance, a top-rate international journal on finance.

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This paper looks into the association between intangible intensity and stock price crash risk of U.S. listed companies from 1983 to 2017. The results show that intangible-intensive firms are associated with high stock price crash risk. The decomposition of intangible intensity identifies goodwill as the driving force and documents its predictability for future impairment events. Moreover, intangible intensity affects stock price crash risk mainly through increased information asymmetry, and the positive association increases with stock price synchronicity, CEO risk-taking incentives, and shareholder litigation risk. Overall, the study demonstrates the fragility of intangible assets and provides implications for financial regulation and portfolio management.

The paper has broadened the scope of studies on the effects of enterprise innovations and M&As on stock price crash risk in recent years, and adopts a comprehensive measurement method to reflect the scale and productivity of intangible assets. Based on detailed disclosures of intangible assets in Calcbench, it further breaks down intangible intensity into different components, which can identify the driving force of various types of intangible assets for stock price crash risk.

Serwai Lai, a co-author of the paper, is a 2018 international postgraduate student from the School of Finance. He graduated from Tunku Abdul Rahman University College, Malaysia, and received a country-specific scholarship from the Chinese government. He has prominent research capabilities and has accomplished a number of research results. This paper is subsidized by the Young Research and Innovation Team Fund of CUFE.