EconPapers    
Economics at your fingertips  
 

External labour market competitions and stock price crash risk: evidence from exposures to competitor CEOs’ award‐winning events

Leye Li, Louise Yi Lu and Dongyue Wang

Accounting and Finance, 2022, vol. 62, issue S1, 1421-1460

Abstract: This study examines whether chief executive officers’ (CEOs’) external labour market competitions affect their firms’ stock price crash risks. Using CEOs’ exposure to the prestigious media‐award‐winning events of competitor CEOs, we document a significant increase in stock crash risk for firms with award‐exposed CEOs, compared with firms without such CEOs, and this treatment effect is attenuated by strong external monitoring and a high‐quality information environment, yet exacerbated by CEOs’ similarity with award winners and likelihood of winning the award. We further find that withholding bad news, risk taking and financial misreporting are the possible channels through which competitor CEOs’ award events affect stock price crash risk. Our study sheds new light on the formerly under‐researched adverse effects of CEO awards by suggesting that external labour market competition associated with CEO awards plays an important role in influencing extreme downside risk in the equity market.

Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://doi.org/10.1111/acfi.12828

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:acctfi:v:62:y:2022:i:s1:p:1421-1460

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0810-5391

Access Statistics for this article

Accounting and Finance is currently edited by Robert Faff

More articles in Accounting and Finance from Accounting and Finance Association of Australia and New Zealand Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().

 
Page updated 2022-05-07
Handle: RePEc:bla:acctfi:v:62:y:2022:i:s1:p:1421-1460