Industry tournament incentives and stock price crash risk

Thomas R. Kubick and G. Brandon Lockhart

Financial Management, 2021, vol. 50, issue 2, 345-369

Abstract: Theoretical and empirical studies argue that managerial hoarding of negative firm‐specific information can result in large negative stock price corrections once the accumulated information is revealed. A managerial labor market with tournament‐like progression provides managers with the incentive to withhold negative information. We find that chief executive officers with stronger incentives to progress in the managerial labor market tournament have significantly greater stock price crash risk, consistent with a greater propensity for these executives to withhold negative firm‐specific information. The empirical patterns that we document suggest a negative externality to the positive incentive effects provided by the managerial labor market.

Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
https://doi.org/10.1111/fima.12325

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:finmgt:v:50:y:2021:i:2:p:345-369

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0046-3892

Access Statistics for this article

Financial Management is currently edited by William G. Christie

More articles in Financial Management from Financial Management Association International Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().