The Association between Corporate Governance and Stock Price Crash Risk

• Main Authors: Yi Hua Luo, 羅翊華
• Other Authors: Fengyi Lin
• Format: Others
• Published: 2017
• Online Access: http://ndltd.ncl.edu.tw/handle/jfxdzh

碩士 === 國立臺北科技大學 === 經營管理系碩士班 === 105 === In 2016, a series of corporate scandals in Taiwan such as XPEC Entertainment or Mega International Commercial Bank results in many investors suffered severe losses. Previous studies indicate that stock price crashes are likely to occur among firms with severe agency problems. Managers, in such firms, due to career and compensation concerns, may exploit information asymmetries to conceal negative information. However, If managers accumulate bad news up to a certain threshold, all bad news comes out at once leading to a stock price crash. Using the sample of Taiwanese firms for the period 2003-2105(excluding the period of the financial crisis 2008).This study examines the impact of two corporate governance dimensions which comprise ownership structure and board structure on future stock price crash risk. Empirical evidence shows that institutional holdings volatility and CEO duality increase crash risk while stockholding of directors mitigate crash risk. Overall these relationships are more pronounced for firms with lower degree of information transparency or lower degree of corporate social responsibility.