CEO age and stock price crash risk

By Panayiotis Ch. Andreou, C. Louca, Andreas P. Petrou. 2017

390 citations recorded by the source corpus.

We show that firms with younger CEOs are more likely to experience stock price crashes, including crashes caused by revelation of negative news in the form of breaks in strings of consecutive earnings increases. Such strings are accompanied by large increases in CEO compensation that do not dissipate with crashes. These findings suggest that CEOs have financial incentives to hoard bad news earlier in their career, which increases future crashes. This negative impact of CEO age effect is strongest in the presence of managerial discretion. Overall, the findings highlight the importance of CEO age for firm policies and outcomes.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/0e755bf493112bda846b4b69f7686990279b038c

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In Accounting

1. Yiwei Li
2. Yeqin Zeng

In Finance

1. Yiwei Li
2. Yeqin Zeng

Citations in the corpus

• CEO Duality, Agency Costs, and Internal Capital Allocation Efficiency (2019, neutral): “The average tenure of the CEOs is 7.6 years and the average CEO is about 57 years old, figures similar to those reported in Andreou et al .”
• The impact of top executive gender on asset prices: Evidence from stock price crash risk (2019, positive): “, 2015), religiosity at the county level (Callen and Fang, 2015), and CEO age (Andreou et al., 2016) are negatively associated with future stock price crash risk. We expect female executives to affect crash risk through two channels. First, most gender studies support the view that women are more ri”