Abstract
This study investigates the nonlinear relationship between CEO tenure and stock price crash risk. Using data from publicly listed U.S. firms over the period from 2000 – 2022, we report an inverted U-shaped association between CEO tenure and stock price crash risk. Specifically, managers in their early tenure appear to hoard bad news up to a threshold. After this threshold, managers appear to engage in less bad news-hoarding behavior. The threshold value of CEO tenure is attenuated by director stock ownership and lower litigation risk. The results underscore the need for monitoring early career CEOs given the nonlinear association.
| Original language | English |
|---|---|
| Article number | 105969 |
| Journal | Finance Research Letters |
| Volume | 68 |
| DOIs | |
| State | Published - Oct 2024 |
Keywords
- Ceo tenure
- Director stock ownership
- Litigation risk
- Nonlinearity
- tail risk
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