The informal hierarchy of board and stock price crash risk

Yang Liu, Qianqian Zhang and Jinda Li

Finance Research Letters, 2023, vol. 58, issue PC

Abstract: We examine the impact of the clarity of the informal board hierarchy on a firm's stock price crash risk. By analyzing data from Chinese A-shares between 2010 and 2021, we find that: First, there is a positive relationship between the clarity of the informal board hierarchy and stock price crash risk, suggesting that when the board hierarchy is less transparent, it contributes to a higher likelihood of stock price crashes. Second, the above effect is moderated by the level of independence of the supervisory board. When the supervisory board possesses greater autonomy in decision-making, it helps mitigate the above effect.

Keywords: Stock price crash risk; Informal board hierarchy; Supervisory board economic independence (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:58:y:2023:i:pc:s1544612323007857

DOI: 10.1016/j.frl.2023.104413

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