Corporate Governance and Firm-specific Stock Price Crashes

Andreou, P.; Antoniou, C.; Horton, J.; Louca, C.

doi:10.1111/eufm.12084

Corporate Governance and Firm-specific Stock Price Crashes

Andreou, P.; Antoniou, C.; Horton, J.; Louca, C.

Authors

Professor Panayiotis Andreou panayiotis.andreou@durham.ac.uk
Professor

C. Antoniou

J. Horton

C. Louca

Abstract

We investigate whether ownership structure, accounting opacity, board structure & processes and managerial incentives attributes relate to future stock price crash risk. Principal component analysis on the 21 attributes that comprise these four corporate governance dimensions reveals that they can explain between 13.1% and 23.0% of a one standard deviation in crash risk. Transient institutional ownership, CEO stock option incentives and the proportion of directors that hold equity increase crash risk, whilst insiders' ownership, accounting conservatism, board size and the presence of a corporate governance policy mitigate crash risk. Overall these relationships are more pronounced in environments that accentuate agency risk.

Citation

Andreou, P., Antoniou, C., Horton, J., & Louca, C. (2016). Corporate Governance and Firm-specific Stock Price Crashes. European Financial Management, 22(5), 916-956. https://doi.org/10.1111/eufm.12084

Journal Article Type	Article
Acceptance Date	Nov 30, 2015
Online Publication Date	Mar 6, 2016
Publication Date	Nov 1, 2016
Deposit Date	Jan 4, 2016
Publicly Available Date	Mar 6, 2018
Journal	European Financial Management
Print ISSN	1354-7798
Electronic ISSN	1468-036X
Publisher	Wiley
Peer Reviewed	Peer Reviewed
Volume	22
Issue	5
Pages	916-956
DOI	https://doi.org/10.1111/eufm.12084
Keywords	Crash risk, Corporate governance, Agency risk, Information environment
Public URL	https://durham-repository.worktribe.com/output/1395600

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Copyright Statement
This is the accepted version of the following article: Andreou, P. C., Antoniou, C., Horton, J. and Louca, C. (2016), Corporate Governance and Firm-specific Stock Price Crashes. European Financial Management, 22(5): 916-956, which has been published in final form at https://doi.org/10.1111/eufm.12084. This article may be used for non-commercial purposes in accordance With Wiley Terms and Conditions for self-archiving.