Corporate Governance and Firm-Specific Stock Price Crashes
Panayiotis C. Andreou
Cyprus University of Technology; Durham University - Durham Business School
University of Exeter - Xfi Centre for Finance and Investment
London School of Economics & Political Science (LSE) - Department of Accounting and Finance
Cyprus University of Technology; University of Durham
June 3, 2013
We investigate whether firms’ corporate governance systems can predict their propensity to experience firm-specific stock price crashes. In a multivariable framework that controls for variables previously shown to affect stock price crashes we find that several governance measures that capture firms’ ownership structure, accounting opacity, as well as board structure and processes relate to future crashes. Moreover, we find that these relationships are typically asymmetric for increases and increases in the governance measures, and that they are stronger for firms with greater agency problems.
Number of Pages in PDF File: 49
Keywords: Crash Risk, Corporate Governance
JEL Classification: G30working papers series
Date posted: March 28, 2012 ; Last revised: June 3, 2013
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