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Top management team stability and stock price crash risk: Evidence from China

Author

Listed:
  • Deng, Bofu
  • Peng, Zhenge
  • Chan, Kam C.
  • Chen, Hongce

Abstract

We empirically examine the association between top management team stability and stock price crash risk. Using a sample of Chinese listed companies for 2007–2021, we find that top management team stability has a negative effect on stock price crash risk. Mechanism tests show that this effect operates through reducing business risk, agency costs and improving information quality. Additional analysis reveals that this relationship is more pronounced in companies audited by non-Big Four firms and those with high executive shareholding. Our study integrates the characteristics of internal human capital teams with capital market information efficiency, offering a novel contribution to the literature on stock price crash risk.

Suggested Citation

  • Deng, Bofu & Peng, Zhenge & Chan, Kam C. & Chen, Hongce, 2025. "Top management team stability and stock price crash risk: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 102(C).
    • Handle: RePEc:eee:finana:v:102:y:2025:i:c:s1057521925002133
    DOI: 10.1016/j.irfa.2025.104126
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    Keywords

    Top management team stability; Management characteristics; Information quality; Stock price crash risk;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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