대학갤러리

 

 

Abstract:

Corporate America managers are heterogenous with respect to their experiences, skill sets, and management styles. In this study, we explore CEO lifetime experiences to explain stock price crash risk. Following methodology by Custodio, Ferreira, and Matos (2013), our results show that those CEOs with diverse backgrounds from multiple industries is negatively associated with stock price crash risk. CEOs with general background are less incentivized to hoard negative information than those CEOs with limited work experience from a single industry (or limited number of industries). CEOs’ diverse backgrounds is catalyst for transparent information because they have a higher re-employment opportunity than those CEOs with limited experience in case of removal from the current position. We address endogeneity problem with firm fixed effects model, instrument variable approach, and propensity matching, and the results largely remain the same.

JEL Classification: G21, G32

Keywords: Stock price crash risk; CEOs; Information hoarding; Third moment