Goodwill and Stock Price Crash Risk

In this study, we examine the impact of goodwill and goodwill impairment on stock price crash risk. Using a sample of U.S. listed firms from 2003 to 2020, we find strong evidence suggesting that the magnitude of goodwill in the balance sheet increases stock price crash risk. We measure firm-specific crash risk by the negative skewness of firm-specific weekly returns. Our results also demonstrate that firms who report frequent goodwill impairments reduce their stock price crash risk