Compensation peer crash risks and corporate own investments: New evidences from U.S. stock markets |
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| Institution: | 1. Center for Quantitative Economics, Jilin University, Changchun, Jilin 130015, PR China;2. School of Business, Renmin University of China, Beijing, 100872, PR China;3. Faculty of Finance, City University of Macau, Macau SAR 999078, PR China;4. Faculty of Business Administration, University of Macau, Macau SAR 999078, PR China;1. College of Management and Economics, Tianjin University, Tianjin 300072, China;2. School of Economics and Finance, Massey University, New Zealand;1. School of Economics and Management, Southwest Jiaotong University, Chengdu, China;2. Service Science and Innovation Key Laboratory of Sichuan Province;3. School of Economics, Southwest University of Political Science & Law, No. 301 Baosheng Avenue, Yubei District, Chongqing, China;4. Institute of Chinese Financial Studies, Southwestern University of Finance and Economics, No. 555 Liutai Avenue, Wenjiang District, Chengdu City, Sichuan Province, China;1. Hull University Business School, University of Hull, Cottingham Road, Hull HU6 7RX, United Kingdom;2. School of Business and Economics, Loughborough University, Loughborough LE11 3TU, United Kingdom;3. School of Business, University of Leicester, University Road, Leicester LE1 7RH, United Kingdom |
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| Abstract: | This study, employing US listed firms with compensation peer disclosures, investigates the impact of compensation and industry peer stock price crash risks on firms' own investments. We document three new evidences in the examination. First, we find that firms' own investments are positively affected by compensation peer crash risks but not industry peers. Second, we show that firms' own investments are explained by compensation peer crash risks only. Third, we demonstrate that the compensation peer crash risks and firms' own investments relation is positively moderated by corporate governance. Besides, additional analysis suggests that peers' incentive effect is a possible explanation to the positive compensation peer crash risks and firms' own investments relation. |
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