Do Executives Have Fixed Effects on Firm-Level Stock Price Crash/Jump Risk? Evidence from CEOS and Cfos

Abstract

This paper investigates whether individual CEOs and CFOs have manager’s fixed effects on firm-level future stock price crash and jump risk. We find that both CEOs and CFOs have fixed effects on firm-level stock price crash and jump risk. Such effects hold to a battery of robustness tests. We find that such fixed effects are less pronounced for firms with better information environments and that CEOs’ fixed effects are stronger than that of CFOs’. Lastly, consistent with managers’ fixed effects, we find that CEOs’ professional qualifications (e.g. MBA and JD degree and CPA license) and CFOs’ family status and military experience are associated with stock price crash and jump risk.

Keywords: G3, M40, M5