Are corporate general counsels in top management effective monitors? Evidence from stock price crash risk

Md Al Mamun, Balasingham Balachandran, Huu Nhan Duong, Ferdinand A. Gul

Research output: Contribution to journalArticleResearchpeer-review

Abstract

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.

Original languageEnglish
Pages (from-to)405-437
Number of pages33
JournalEuropean Accounting Review
Volume30
Issue number2
DOIs
Publication statusPublished - 2021

Keywords

  • Corporate general counsel
  • Discretionary accruals
  • Opaque financial reports
  • Stock price crash risk

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