Stock price crash risk and CEO power: Firm-level analysis |
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| Institution: | 1. Farmer School of Business, Miami University, United States;2. Olin Business School, Washington University in St. Louis, United States;3. Collins College of Business, University of Tulsa, United States |
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| Abstract: | This study examines the impact of stock price crash risk on future CEO power. Using a large panel sample with 17,816 firm-year observations, we posit and find a significant negative impact of stock price crash risk on CEO power, suggesting that CEO power becomes smaller after stock price crashes. We also find that our results are stronger for firms with female CEOs and are largely driven by firms with shorter-tenure CEOs. In addition, we find that the significant negative impact of stock price crash risk on CEO power is diminished for firms with strong corporate governance. Our study responds to the call in Habib, Hasan, and Jiang (2018) by providing more empirical evidence on the consequences of stock price crash risk. |
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| Keywords: | Stock price crash risk CEO power CEO compensation |
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