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Full-Text Articles in Business
Cfos Versus Ceos: Equity Incentives And Crashes, Jeong-Bon Kim, Yinghua Li, Liandong Zhang
Cfos Versus Ceos: Equity Incentives And Crashes, Jeong-Bon Kim, Yinghua Li, Liandong Zhang
Research Collection School Of Accountancy
Using a large sample of U.S. firms for the period 1993-2009, we provide evidence that the sensitivity of a chief financial officer's (CFO) option portfolio value to stock price is significantly and positively related to the firm's future stock price crash risk. In contrast, we find only weak evidence of the positive impact of chief executive officer option sensitivity on crash risk. Finally, we find that the link between CFO option sensitivity and crash risk is more pronounced for firms in non-competitive industries and those with a high level of financial leverage.
Corporate Tax Avoidance And Stock Price Crash Risk: Firm-Level Analysis, Jeong-Bon Kim, Yinghua Li, Liandong Zhang
Corporate Tax Avoidance And Stock Price Crash Risk: Firm-Level Analysis, Jeong-Bon Kim, Yinghua Li, Liandong Zhang
Research Collection School Of Accountancy
Using a large sample of U.S. firms for the period 1995-2008, we provide strong and robust evidence that corporate tax avoidance is positively associated with firm-specific stock price crash risk. This finding is consistent with the following view: Tax avoidance facilitates managerial rent extraction and bad news hoarding activities for extended periods by providing tools, masks, and justifications for these opportunistic behaviors. The hoarding and accumulation of bad news for extended periods lead to stock price crashes when the accumulated hidden bad news crosses a tipping point, and thus comes out all at once. Moreover, we show that the positive …