TY - JOUR
T1 - Are corporate general counsels in top management effective monitors? Evidence from stock price crash risk
AU - Al Mamun, Md
AU - Balachandran, Balasingham
AU - Duong, Huu Nhan
AU - Gul, Ferdinand A.
PY - 2021
Y1 - 2021
N2 - We find that firms with a top management counsel (TMC) have lower stock price crash risk than other firms. We further show that firms with a TMC issue more negative relative to positive earnings guidance and use more negative relative to positive words in their annual report filings, compared to firms without a TMC. TMCs are more effective in mitigating crash risk when they serve on the board. Our findings support the monitoring role of TMCs in mitigating bad news hoarding, which, in turn, contributes to the reduction in crash risk.
AB - We find that firms with a top management counsel (TMC) have lower stock price crash risk than other firms. We further show that firms with a TMC issue more negative relative to positive earnings guidance and use more negative relative to positive words in their annual report filings, compared to firms without a TMC. TMCs are more effective in mitigating crash risk when they serve on the board. Our findings support the monitoring role of TMCs in mitigating bad news hoarding, which, in turn, contributes to the reduction in crash risk.
KW - Corporate general counsel
KW - Discretionary accruals
KW - Opaque financial reports
KW - Stock price crash risk
UR - http://www.scopus.com/inward/record.url?scp=85086474476&partnerID=8YFLogxK
U2 - 10.1080/09638180.2020.1763819
DO - 10.1080/09638180.2020.1763819
M3 - Article
AN - SCOPUS:85086474476
SN - 0963-8180
VL - 30
SP - 405
EP - 437
JO - European Accounting Review
JF - European Accounting Review
IS - 2
ER -