IDEAS home Printed from https://ideas.repec.org/a/eee/finana/v84y2022ics1057521922003702.html
   My bibliography  Save this article

Executive team heterogeneity, equity pledges, and stock Price crash risk: Evidence from China

Author

Listed:
  • Li, Ziyang
  • Han, Ning
  • Zeng, Qing
  • Li, Yu

Abstract

Heterogeneous characteristics of executive teams have drawn wide concern as a factor highly related to economic decisions. Using data from 2015 to 2020 among Chinese A-share listed companies, we examine the moderating role played by executive team heterogeneity in the positive impact of controlling shareholder equity pledges on stock crash risk. We find that executive team heterogeneity of overseas background and age reduce the positive impact, while tenure heterogeneity increases the positive impact. Further evidence shows that political connections, ownership property and D&O liability insurance can induce different moderating effects of executive team heterogeneity in the relationship between equity pledges and stock price crash risk. Our study also contributes to helping listed companies effectively manage stock crash risk connected with equity pledges.

Suggested Citation

  • Li, Ziyang & Han, Ning & Zeng, Qing & Li, Yu, 2022. "Executive team heterogeneity, equity pledges, and stock Price crash risk: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 84(C).
    • Handle: RePEc:eee:finana:v:84:y:2022:i:c:s1057521922003702
    DOI: 10.1016/j.irfa.2022.102420
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1057521922003702
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.irfa.2022.102420?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Fan, Joseph P.H. & Wong, T.J. & Zhang, Tianyu, 2007. "Politically connected CEOs, corporate governance, and Post-IPO performance of China's newly partially privatized firms," Journal of Financial Economics, Elsevier, vol. 84(2), pages 330-357, May.
    2. Jin, Li & Myers, Stewart C., 2006. "R2 around the world: New theory and new tests," Journal of Financial Economics, Elsevier, vol. 79(2), pages 257-292, February.
    3. Jose M. Marin & Jacques P. Olivier, 2008. "The Dog That Did Not Bark: Insider Trading and Crashes," Journal of Finance, American Finance Association, vol. 63(5), pages 2429-2476, October.
    4. Ahsan Habib & Mostafa Monzur Hasan & Haiyan Jiang, 2018. "Stock price crash risk: review of the empirical literature," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 58(S1), pages 211-251, November.
    5. Kebin Deng & Haijian Zeng & Yushu Zhu, 2019. "Political connection, market frictions and financial constraints: evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 59(4), pages 2377-2414, December.
    6. Grossman, Sanford J. & Hart, Oliver D., 1988. "One share-one vote and the market for corporate control," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 175-202, January.
    7. Holderness, Clifford G., 1990. "Liability insurers as corporate monitors," International Review of Law and Economics, Elsevier, vol. 10(2), pages 115-129, September.
    8. Choi, Young Mok & Park, Kunsu, 2022. "Zero-leverage policy and stock price crash risk: Evidence from Korea," International Review of Financial Analysis, Elsevier, vol. 81(C).
    9. Kim, Jeong-Bon & Li, Yinghua & Zhang, Liandong, 2011. "Corporate tax avoidance and stock price crash risk: Firm-level analysis," Journal of Financial Economics, Elsevier, vol. 100(3), pages 639-662, June.
    10. Ma, Feng & Wang, Ruoxin & Lu, Xinjie & Wahab, M.I.M., 2021. "A comprehensive look at stock return predictability by oil prices using economic constraint approaches," International Review of Financial Analysis, Elsevier, vol. 78(C).
    11. Li, Michelle & Liu, Chelsea & Scott, Tom, 2019. "Share pledges and firm value," Pacific-Basin Finance Journal, Elsevier, vol. 55(C), pages 192-205.
    12. Zhou, Jingting & Li, Wanli & Yan, Ziqiao & Lyu, Huaili, 2021. "Controlling shareholder share pledging and stock price crash risk: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 77(C).
    13. Jiang, Kangqi & Du, Xinyi & Chen, Zhongfei, 2022. "Firms' digitalization and stock price crash risk," International Review of Financial Analysis, Elsevier, vol. 82(C).
    14. Ronald Anderson & Michael Puleo, 2020. "Insider Share-Pledging and Equity Risk," Journal of Financial Services Research, Springer;Western Finance Association, vol. 58(1), pages 1-25, August.
    15. Talke, Katrin & Salomo, Sören & Rost, Katja, 2010. "How top management team diversity affects innovativeness and performance via the strategic choice to focus on innovation fields," Research Policy, Elsevier, vol. 39(7), pages 907-918, September.
    16. Yunsen Chen & Yilu Deng & Yufang Jin & Hetong Lou & Xin Zhang, 2020. "Political Connection and Regulatory Scrutiny through Comment Letters: Evidence from China," International Review of Finance, International Review of Finance Ltd., vol. 20(3), pages 789-798, September.
    17. Xu, Weiju & Ma, Feng & Chen, Wang & Zhang, Bing, 2019. "Asymmetric volatility spillovers between oil and stock markets: Evidence from China and the United States," Energy Economics, Elsevier, vol. 80(C), pages 310-320.
    18. Jingjing Xu, 2021. "Relationship Between Controlling Shareholders’ Participation in Share Pledging and Accounting Conservatism in China," Australian Accounting Review, CPA Australia, vol. 31(1), pages 9-21, March.
    19. Jiahua Xu & Lan Zou, 2019. "The impact of CEO pay and its disclosure on stock price crash risk: evidence from China," China Finance Review International, Emerald Group Publishing Limited, vol. 9(4), pages 479-497, July.
    20. Jones Heese & Mozaffar Khan & Karthik Ramanna, 2017. "Is the SEC Captured? Evidence from Comment-Letter Reviews," Harvard Business School Working Papers 17-087, Harvard Business School.
    21. Boubakri, Narjess & Guedhami, Omrane & Mishra, Dev & Saffar, Walid, 2012. "Political connections and the cost of equity capital," Journal of Corporate Finance, Elsevier, vol. 18(3), pages 541-559.
    22. Zhe An & Zhian Chen & Donghui Li & Lu Xing, 2018. "Individualism and stock price crash risk," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 49(9), pages 1208-1236, December.
    23. Cui, Yu & Zhang, Yamin & Guo, Jingjing & Hu, Hao & Meng, Hua, 2019. "Top management team knowledge heterogeneity, ownership structure and financial performance: Evidence from Chinese IT listed companies," Technological Forecasting and Social Change, Elsevier, vol. 140(C), pages 14-21.
    24. Tsun‐Siou Lee & Yin‐Hua Yeh, 2004. "Corporate Governance and Financial Distress: evidence from Taiwan," Corporate Governance: An International Review, Wiley Blackwell, vol. 12(3), pages 378-388, July.
    25. Jia, Ning, 2018. "Corporate innovation strategy and stock price crash risk," Journal of Corporate Finance, Elsevier, vol. 53(C), pages 155-173.
    26. Talavera, Oleksandr & Yin, Shuxing & Zhang, Mao, 2018. "Age diversity, directors' personal values, and bank performance," International Review of Financial Analysis, Elsevier, vol. 55(C), pages 60-79.
    27. Prendergast, Canice & Stole, Lars, 1996. "Impetuous Youngsters and Jaded Old-Timers: Acquiring a Reputation for Learning," Journal of Political Economy, University of Chicago Press, vol. 104(6), pages 1105-1134, December.
    28. Mariassunta Giannetti & Guanmin Liao & Xiaoyun Yu, 2015. "The Brain Gain of Corporate Boards: Evidence from China," Journal of Finance, American Finance Association, vol. 70(4), pages 1629-1682, August.
    29. Heese, Jonas & Khan, Mozaffar & Ramanna, Karthik, 2017. "Is the SEC captured? Evidence from comment-letter reviews," Journal of Accounting and Economics, Elsevier, vol. 64(1), pages 98-122.
    30. Sonja Sperber & Christian Linder, 2018. "The impact of top management teams on firm innovativeness: a configurational analysis of demographic characteristics, leadership style and team power distribution," Review of Managerial Science, Springer, vol. 12(1), pages 285-316, January.
    31. Jin-hui Luo & Yuangao Xiang & Ruichao Zhu, 2017. "Military top executives and corporate philanthropy: Evidence from China," Asia Pacific Journal of Management, Springer, vol. 34(3), pages 725-755, September.
    32. Yuan, Rongli & Sun, Jian & Cao, Feng, 2016. "Directors' and officers' liability insurance and stock price crash risk," Journal of Corporate Finance, Elsevier, vol. 37(C), pages 173-192.
    33. Shahab, Yasir & Ntim, Collins G. & Ullah, Farid & Yugang, Chen & Ye, Zhiwei, 2020. "CEO power and stock price crash risk in China: Do female directors' critical mass and ownership structure matter?," International Review of Financial Analysis, Elsevier, vol. 68(C).
    34. Ulrike Malmendier & Geoffrey Tate & Jon Yan, 2011. "Overconfidence and Early‐Life Experiences: The Effect of Managerial Traits on Corporate Financial Policies," Journal of Finance, American Finance Association, vol. 66(5), pages 1687-1733, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ruwei Zhao & Ruixin Fan & Xiong Xiong & Jianli Wang & Jitka Hilliard, 2023. "Media Tone and Stock Price Crash Risk: Evidence from China," Mathematics, MDPI, vol. 11(17), pages 1-14, August.
    2. Li, Ziyang & Chen, Yanjun & Li, Yanlin, 2023. "Top management abnormal turnover and stock price crash risk: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 89(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zhou, Jingting & Li, Wanli & Yan, Ziqiao & Lyu, Huaili, 2021. "Controlling shareholder share pledging and stock price crash risk: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 77(C).
    2. Hu, Gang & Liu, Yiye & Wang, Jacqueline Wenjie & Zhou, Gaoguang & Zhu, Xindong, 2022. "Insider ownership and stock price crash risk around the globe," Pacific-Basin Finance Journal, Elsevier, vol. 72(C).
    3. Li, Ziyang & Chen, Yanjun & Li, Yanlin, 2023. "Top management abnormal turnover and stock price crash risk: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 89(C).
    4. Benkraiem, Ramzi & Galariotis, Emilios & Guizani, Assil & Lakhal, Faten, 2022. "Product market competition and stock price crash risk: Exploring the role of managerial ownership," Research in International Business and Finance, Elsevier, vol. 63(C).
    5. Cai, Guilong & Xu, Yue & Yu, Degan & Zhang, Junsheng & Zheng, Guojiang, 2019. "Strengthened board monitoring from parent company and stock price crash risk of subsidiary firms," Pacific-Basin Finance Journal, Elsevier, vol. 56(C), pages 352-368.
    6. Richardson, Grant & Obaydin, Ivan & Liu, Chelsea, 2022. "The effect of accounting fraud on future stock price crash risk," Economic Modelling, Elsevier, vol. 117(C).
    7. Sun, Sophia Li & Habib, Ahsan & Huang, Hedy Jiaying, 2019. "Tournament incentives and stock price crash risk: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 54(C), pages 93-117.
    8. Fiordelisi, Franco & Ricci, Ornella & Santilli, Gianluca, 2023. "Environmental engagement and stock price crash risk: Evidence from the European banking industry," International Review of Financial Analysis, Elsevier, vol. 88(C).
    9. Lu, Jing & Qiu, Yuhang, 2023. "Does non-punitive regulation diminish stock price crash risk?," Journal of Banking & Finance, Elsevier, vol. 148(C).
    10. Bai, Min & Li, Shihe & Lien, Donald & Yu, Chia-Feng (Jeffrey), 2022. "The winner's curse in high-tech enterprise certification: Evidence from stock price crash risk," International Review of Financial Analysis, Elsevier, vol. 82(C).
    11. Zuo, Junqing & Zhang, Wei & Hu, Mingya & Feng, Xu & Zou, Gaofeng, 2022. "Employee relations and stock price crash risk: Evidence from employee lawsuits," International Review of Financial Analysis, Elsevier, vol. 82(C).
    12. Eugster, Nicolas & Wang, Qingxia, 2023. "Large blockholders and stock price crash risk: An international study," Global Finance Journal, Elsevier, vol. 55(C).
    13. Choi, Young Mok & Park, Kunsu, 2022. "Zero-leverage policy and stock price crash risk: Evidence from Korea," International Review of Financial Analysis, Elsevier, vol. 81(C).
    14. Changyun Wang & Chenyu Wang & Weixing Wu, 2023. "Customers' stock price crash risk and suppliers' investment inefficiency: Evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(5), pages 5069-5092, December.
    15. Zaman, Rashid & Atawnah, Nader & Haseeb, Muhammad & Nadeem, Muhammad & Irfan, Saadia, 2021. "Does corporate eco-innovation affect stock price crash risk?," The British Accounting Review, Elsevier, vol. 53(5).
    16. Jebran, Khalil & Chen, Shihua & Zhang, Ruibin, 2020. "Board diversity and stock price crash risk," Research in International Business and Finance, Elsevier, vol. 51(C).
    17. Chen, Yangyang & Fan, Qingliang & Yang, Xin & Zolotoy, Leon, 2021. "CEO early-life disaster experience and stock price crash risk," Journal of Corporate Finance, Elsevier, vol. 68(C).
    18. Nguyen, Dat Thanh & Tran, Vuong Thao & Phan, Dinh Hoang Bach, 2023. "Does green activity impact stock price crash risk? The role of climate risk," Finance Research Letters, Elsevier, vol. 55(PA).
    19. Teng, Chia-Chen & Yang, J. Jimmy, 2021. "Media exposure on corporate social irresponsibility and firm performance," Pacific-Basin Finance Journal, Elsevier, vol. 68(C).
    20. Chen, Jing & Liu, Xinghe & Ou, Fenghao & Lu, Meiting & Wang, Peipei, 2023. "Green lending and stock price crash risk: Evidence from the green credit reform in China," Journal of International Money and Finance, Elsevier, vol. 130(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finana:v:84:y:2022:i:c:s1057521922003702. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/620166 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.