CEO Power and Stock Price Crash Risk in China: Do Female Directors’ Critical Mass and Ownership Structure Matter?

Shahab, Y., Ntim, C.G., Ullah, F., Yugang, C., & Ye, Z. (2020). CEO power and stock price crash risk in China: Do female directors’ critical mass and ownership structure matter? International Review of Financial Analysis, Forthcoming.

57 Pages Posted: 18 Feb 2021 Last revised: 19 Feb 2021

See all articles by Yasir Shahab

Yasir Shahab

School of Accounting, Xijing University

Collins G. Ntim

University of Southampton Business School, UK; University of Southampton

Farid Ullah

University of International Business and Economics (UIBE) - School of International Trade and Economics

Yugang Chen

Sun Yat-sen University (SYSU) - School of Business

Zhiwei Ye

University of International Business and Economics (UIBE)

Date Written: January 20, 2020

Abstract

This study investigates how CEO power is associated with stock price crash risk. We further examine the moderating roles of female directors’ critical mass and ownership structure on the relationship between CEO power and stock price crash risk. Employing one of the largest datasets to-date of Chinese listed firms over the 2005-2015 period (13,421 firm-year observations), we find that CEO’s power to increase the likelihood of stock price crash risk is significantly mitigated when the percentage of: (a) female directors; and (b) ownership by blockholders and institutions, is high within firms. We interpret our findings within a theoretical framework that draws insights from neo-institutional, managerial power and critical mass theories. The findings are robust to the use of alternative measures, estimation methods and endogeneity issues.

Keywords: CEO power; stock price crash risk; female director critical mass; ownership structure; managerial power theory; China

JEL Classification: G3; G34; G38

Suggested Citation

Shahab, Yasir and Ntim, Collins G. and Ullah, Farid and Chen, Yugang and Ye, Zhiwei, CEO Power and Stock Price Crash Risk in China: Do Female Directors’ Critical Mass and Ownership Structure Matter? (January 20, 2020). Shahab, Y., Ntim, C.G., Ullah, F., Yugang, C., & Ye, Z. (2020). CEO power and stock price crash risk in China: Do female directors’ critical mass and ownership structure matter? International Review of Financial Analysis, Forthcoming., Available at SSRN: https://ssrn.com/abstract=3768159

Yasir Shahab

School of Accounting, Xijing University ( email )

Xijing Road
Chang'An District
Xi'an, Shaanxi Province, Shaanxi Province 710123
China
+8613126584641 (Phone)

Collins G. Ntim (Contact Author)

University of Southampton Business School, UK ( email )

Southampton Business School
Highfield
Southampton, England SO17 IBJ
United Kingdom
+44 (0) 238059 4285 (Phone)
+44 (0) 238059 3844 (Fax)

HOME PAGE: http://www.southampton.ac.uk/business-school/about/staff/cgn1n11.page

University of Southampton ( email )

Southampton, SO17 1BJ
United Kingdom

Farid Ullah

University of International Business and Economics (UIBE) - School of International Trade and Economics ( email )

10 East Huixin Street
Chaouang District
Beijing, 100029
China

Yugang Chen

Sun Yat-sen University (SYSU) - School of Business

135 Xingang West Road
Sun Yat-Sen University
Guangzhou, Guangdong 510275
China

Zhiwei Ye

University of International Business and Economics (UIBE) ( email )

10, Huixin Dongjie
Changyang District
Beijing, Beijing 100029
China

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