We examine whether classification shifting is associated with stock price crash risk. Unlike prior studies, our study is focused on bad news hoarding through classification shifting. Prior studies document evidence of the greater weight market participants place on core earnings and stock price crash resulting from delayed bad news releases. Building upon these findings, we predict that crash risk is positively associated with shifters’ reversal of core earnings. Consistent with our conjecture, we find that classification shifting is positively associated with future stock price crash risk even if the bottom-line net income is unchanged. This finding is robust after controlling for endogeneity and other determinants of classification shifting. We also find that the observed positive association between classification shifting and future stock price crash risk is pronounced for likely opportunistic classification shifters. Our research contributes to forming an enhanced understanding of crash risk by documenting differential negative market reactions to the change in core earnings driven by classification shifting.

中文翻译：

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分类转移与未来股价崩盘风险

我们研究分类转移是否与股价崩盘风险相关。与之前的研究不同，我们的研究重点是通过分类转移来囤积坏消息。先前的研究证明，市场参与者对核心收益和因坏消息发布延迟而导致的股价暴跌给予了更大的重视。基于这些发现，我们预测崩盘风险与转型者核心收益的逆转呈正相关。与我们的猜想一致，我们发现即使净利润底线不变，分类转移与未来股价崩盘风险正相关。在控制了内生性和分类转移的其他决定因素后，这一发现是稳健的。我们还发现，观察到的分类转变与未来股价崩盘风险之间的正相关关系对于可能的机会主义分类转变者来说是明显的。我们的研究通过记录市场对分类转变驱动的核心收益变化的不同负面反应，有助于加深对崩盘风险的理解。