Stock crash risk is the probability that a stock price or market index suddenly falls sharply without any sign of information. Generally, stock prices are more likely to collapse and have less inflation, the returns on the stock market are asymmetric. The collapse of the stock price will destroy the personal wealth of investors, impact the healthy operation of the capital market, and even affect the development of the national economy. Compared with accounting earnings with more space of cash flow manipulation, the cash flow is regarded as a more reliable information. Due to the importance of cash flow when making investment decision, the manipulation of cash flow may occur. Similar to the manipulation of accounting earnings, the manipulation of cash flow will also reduce the information transparency. Thus I come out with the question does the manipulation of cash flow lead to a higher risk of stock crash. This paper analyzes the relationship between cash flow manipulation and stock crash risk. Moreover, since the institutional investors and high quality audits are considered as effective external corporate governance mechanisms, the paper also tests whether institutional investors and high quality audits can effectively reduce the stock crash risk. This study will be guided by several objectives: to establish the effects that higher degree of cash flow manipulation will lead to a higher risk of stock crash; to find out the effects of the institutional investor factor on the relationship between the stock crash risk and the manipulation of cash flow. I applied both the qualitative and quantitative methods to account for both the nominal and string variables and adopted techniques to test the reliability of the data diagnostic test-analysis and inferential statistics. The empirical findings were established by the ordinary least square regression model. The study found that there was a significant relationship between the manipulation of cash by the management and the potential of a crash or the stock crash risk.