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

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  • Mbanyele, William
  • Huang, Hongyun

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.

Suggested Citation

  • Mbanyele, William & Huang, Hongyun, 2024. "Staggered boards, agency costs and stock price crash risk: Evidence from China," Research in International Business and Finance, Elsevier, vol. 71(C).
    • Handle: RePEc:eee:riibaf:v:71:y:2024:i:c:s0275531924002824
    DOI: 10.1016/j.ribaf.2024.102489
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    Keywords

    Staggered board; agency costs; stock price crash risk; bad news hoarding;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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