Compensation peer crash risks and corporate own investments: New evidences from U.S. stock markets

Yu-En Lin, Xiao-Tong Jiang, Bo Yu and Keith S.K. Lam

International Review of Financial Analysis, 2023, vol. 89, issue C

Abstract: This study, employing US listed firms with compensation peer disclosures, investigates the impact of compensation and industry peer stock price crash risks on firms' own investments. We document three new evidences in the examination. First, we find that firms' own investments are positively affected by compensation peer crash risks but not industry peers. Second, we show that firms' own investments are explained by compensation peer crash risks only. Third, we demonstrate that the compensation peer crash risks and firms' own investments relation is positively moderated by corporate governance. Besides, additional analysis suggests that peers' incentive effect is a possible explanation to the positive compensation peer crash risks and firms' own investments relation.

Keywords: Peer crash risks; Compensation peers; Industry peers; firms' own investments; peers' incentive effect (search for similar items in EconPapers)
JEL-codes: D21 G31 M52 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:89:y:2023:i:c:s1057521923002909

DOI: 10.1016/j.irfa.2023.102774

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