The impact of CEO pay and its disclosure on stock price crash risk: evidence from China

Jiahua Xu and Lan Zou

China Finance Review International, 2019, vol. 9, issue 4, 479-497

Abstract: Purpose - The purpose of this paper is to investigate whether CEO pay is related to stock price crash risk, and how ownership concentration mediates this relationship. Design/methodology/approach - The authors hypothesize that companies who disclose CEO pay would experience lower stock price crash risk than their non-transparent peers. For companies whose CEO pay is published, the authors conjecture that the CEO pay slice is positively related to stock price crash risk. The authors also investigate whether the impact of CEO pay on crash risk would be weaker or stronger under a concentrated ownership structure and a mutual fund ownership structure. This study relies on 14,499 firm-year observations from the Chinese capital market to shed light on these questions. Findings - The authors demonstrate that the magnitude of CEO pay slice has little effect on stock price crash risk. However, whether CEO pay is disclosed at all is a strong indicator for stock price crash risk. Originality/value - The paper expands on the literature by adding a new factor to explain the stock price crash risk, which is vital to investor protection and the stability of the financial market. The research also adds to the sparse literature on CEO centrality and has implications for corporate governance and public policy.

Keywords: Ownership concentration; Crash risk; CEO pay; Mutual fund ownership; C12; D22; M12 (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (18)

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

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:eme:cfripp:cfri-10-2018-0138

DOI: 10.1108/CFRI-10-2018-0138

Access Statistics for this article

China Finance Review International is currently edited by Professor Chongfeng Wu and Professor Haitao Li

More articles in China Finance Review International from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().