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The informal hierarchy of board and stock price crash risk

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  • Liu, Yang
  • Zhang, Qianqian
  • Li, Jinda

Abstract

We examine the impact of the clarity of the informal board hierarchy on a firm's stock price crash risk. By analyzing data from Chinese A-shares between 2010 and 2021, we find that: First, there is a positive relationship between the clarity of the informal board hierarchy and stock price crash risk, suggesting that when the board hierarchy is less transparent, it contributes to a higher likelihood of stock price crashes. Second, the above effect is moderated by the level of independence of the supervisory board. When the supervisory board possesses greater autonomy in decision-making, it helps mitigate the above effect.

Suggested Citation

  • Liu, Yang & Zhang, Qianqian & Li, Jinda, 2023. "The informal hierarchy of board and stock price crash risk," Finance Research Letters, Elsevier, vol. 58(PC).
    • Handle: RePEc:eee:finlet:v:58:y:2023:i:pc:s1544612323007857
    DOI: 10.1016/j.frl.2023.104413
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    References listed on IDEAS

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