Staggered boards, agency costs and stock price crash risk: Evidence from China

William Mbanyele and Hongyun Huang

Research in International Business and Finance, 2024, vol. 71, issue C

Abstract: In this study, we leverage unique, hand-collected data to explore the impact of staggered boards on the likelihood of future stock price crashes. Our analysis shows that companies with staggered boards are at a higher risk of future stock price crashes compared to their counterparts with non-staggered boards, particularly in firms with elevated agency costs and those not state-owned. Additionally, we find that staggered boards exacerbate this risk by failing in their monitoring and advisory capacities. Evidence of this failure emerges through various indicators of diminished oversight, including managerial opportunism, financial reporting manipulation, insider trading, and a rise in both investment and operational inefficiencies. This study not only contributes to the ongoing debate about the implications of staggered boards but also sheds new light on the associated agency costs.

Keywords: Staggered board; agency costs; stock price crash risk; bad news hoarding (search for similar items in EconPapers)
JEL-codes: G30 G34 M12 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:71:y:2024:i:c:s0275531924002824

DOI: 10.1016/j.ribaf.2024.102489

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