The impact of text‐based financial constraints on stock price crash risk: evidence from the UK firms

Acheampong, A ORCID: https://orcid.org/0000-0002-9489-5751, Mousavi, M, Gozgor, G and Patrick, Y, 2025. The impact of text‐based financial constraints on stock price crash risk: evidence from the UK firms. International Journal of Finance and Economics. ISSN 1076-9307

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Abstract

This paper employs a textual analysis approach to quantify financial constraints information from the narrative sections of annual reports in the UK firms. Then, the paper examines the impact of this information on the stock price crash risk in 250 firms from 2005 to 2021. The paper also analyses the moderating role of adopting the International Financial Reporting Standards (IFRS) on the impact of text-based financial constraints on stock price crash risk. It is found that text-based financial constraints are positively associated with stock crash risk measures. It is also observed that adopting the IFRS weakens the positive impact of financial constraints on stock price crash risk. These results are robust to several controls and model specifications. The findings also have several implications for investors and other market participants for seeking evidence of the credibility of annual reports in reflecting relevant information that highlights financial constraints.

Item Type:	Journal article
Publication Title:	International Journal of Finance and Economics
Creators:	Acheampong, A., Mousavi, M., Gozgor, G. and Patrick, Y.
Publisher:	Wiley
Date:	8 January 2025
ISSN:	1076-9307
Identifiers:	Number Type 10.1002/ijfe.3113 DOI 2352821 Other
Rights:	This is the peer reviewed version of the following article: Acheampong, A., Mousavi, M., Gozgor, G., & Patrick, Y. (2025). The impact of text‐based financial constraints on stock price crash risk: evidence from the UK firms. International Journal of Finance and Economics, which has been published in final form at https://doi.org/10.1002/ijfe.3113 This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. This article may not be enhanced, enriched or otherwise transformed into a derivative work, without express permission from Wiley or by statutory rights under applicable legislation. Copyright notices must not be removed, obscured or modified. The article must be linked to Wiley’s version of record on Wiley Online Library and any embedding, framing or otherwise making available the article or pages thereof by third parties from platforms, services and websites other than Wiley Online Library must be prohibited.
Divisions:	Schools > Nottingham Business School
Record created by:	Laura Borcherds
Date Added:	04 Feb 2025 14:46
Last Modified:	04 Feb 2025 14:46
URI:	https://irep.ntu.ac.uk/id/eprint/52971

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