Home Sweet Home: Do Local CEOs Curb Stock Price Crash Risk?

Jing Chen, Deqiang Zhao, Xinghe Liu, Cheng Xu and Luyao Liu

Finance Research Letters, 2022, vol. 50, issue C

Abstract: Motivated by understanding of the under-studied issue of how non-cultural informal institutions influence stock price, our study examines whether CEOs working in their birthplaces reduce stock price crash risk in comparison with non-local CEOs. Our results based on a sample of Chinese listed firms during the period 2007-2019 show that local CEOs significantly lower firms’ stock price crash risk. Further analyses reveal that both clan culture and social trust strengthen the focal relationship. The study advances research on the role of non-cultural informal institutions in influencing stock price crash risk and offers valuable insights for both directors and investors.

Keywords: Local CEOs; Stock price crash risk; Clan culture; Social trust (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:50:y:2022:i:c:s1544612322004937

DOI: 10.1016/j.frl.2022.103314

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