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Title: CEO age and stock price crash risk
Authors: Andreou, Panayiotis C. 
Louca, Christodoulos 
Petrou, Andreas 
Keywords: CEO age;Crash risk;Hoarding of bad news;Agency theory;Managerial discretion
Category: Economics and Business
Field: Social Sciences
Issue Date: 1-May-2017
Source: REVIEW OF FINANCE, Volume: 21, Issue: 3, Pages: 1287-1325, Published: MAY 2017
Journal: Review of Finance
Abstract: 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.
ISSN: 1572-3097
Rights: © The Authors 2016.
Type: Article
Appears in Collections:Άρθρα/Articles

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