A better start: board diversity matters in assessing stock price crash risk

IF 5.5 Q1 BUSINESS

Corporate Governance-The International Journal of Business in Society Pub Date : 2023-09-04 DOI:10.1108/cg-11-2022-0460

Kyungshick Cho, Jaeyoung Cho, Yiyang Bian

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引用次数: 0

Abstract

Purpose The determinants that contribute to reducing stock price crash risk have garnered attention from scholars and practitioners. However, our understanding of the relationship between board diversity and stock crash risk, as well as the contextual factors that influence this relationship, remains limited. To address this gap, this study aims to investigate how different attributes of board diversity affect stock price crash risk, particularly under conditions of higher performance hazard and ownership concentration. Design/methodology/approach Using a two-stage least squares fixed-effects estimator, the authors analyze a panel data set of 1,792 firm-year observations across 282 firms listed on the KOSPI200 from 2010 to 2019. Findings Relation-oriented diversity reduces future stock price crash risk, particularly when firms experience performance shortfalls and have concentrated ownership structures, but task-oriented diversity has no significant effects. The results imply that only relation-oriented diversity strengthens governance mechanisms by curtailing managerial bad news withholding behaviors, and the role of relation-oriented diversity in reducing stock crash risk becomes more crucial when firms have higher performance hazard and concentrated ownership. Originality/value This study makes crucial contributions as follows: the authors contribute to the stock crash risk literature by shifting the focus from how to when board diversity matters in assessing stock crash risk; the authors extend the board diversity research and enhance scholarly understanding of the effects of board diversity on corporate governance by highlighting that not all aspects of board diversity improve firm governance mechanisms; and the authors widen the lens from a single attribute to multiple attributes of diversity to reveal the effects of diversity on boards in assessing future crash risk.

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一个更好的开端:董事会多元化对评估股价崩盘风险很重要

目的降低股价崩盘风险的决定因素已经引起了学者和实践者的关注。然而，我们对董事会多样性和股票崩盘风险之间的关系，以及影响这种关系的背景因素的理解仍然有限。为了解决这一差距，本研究旨在探讨董事会多样性的不同属性如何影响股价崩盘风险，特别是在业绩风险和股权集中度较高的情况下。使用两阶段最小二乘固定效应估计器，作者分析了2010年至2019年在KOSPI200指数上市的282家公司的1,792家公司年度观察数据的面板数据集。研究发现，关系导向的多样性降低了未来股价崩盘的风险，特别是当公司业绩不足和股权结构集中时，但任务导向的多样性没有显著影响。研究结果表明，只有关系导向的多样性才能通过抑制管理层隐瞒坏消息的行为来强化治理机制，并且当公司的绩效风险较高、股权集中时，关系导向的多样性在降低股难风险中的作用更为重要。原创性/价值本研究的重要贡献如下:作者通过将重点从董事会多样性在评估股灾风险中的重要性转移到何时，为股灾风险文献做出了贡献;通过强调并非董事会多样性的所有方面都能改善公司治理机制，作者扩展了董事会多样性研究，增强了对董事会多样性对公司治理影响的学术理解;作者将视角从单一的多样性属性扩大到多种多样性属性，以揭示多样性对董事会评估未来崩溃风险的影响。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Corporate Governance-The International Journal of Business in Society BUSINESS-

CiteScore

11.20

自引率

33.90%

发文量

期刊介绍： Providing a consistent source of in-depth information, analysis and advice considering corporate governance on an international scale, Corporate Governance: The International Journal of Business in Society focuses on knowledge development, practice and performance standards for scholars and Boards of Directors/ Governors of companies throughout the world. The journal publishes a diverse range of substantive theoretical and methodological debates as well as practical developments in the field of corporate governance worldwide. The journal particularly encourages attention to the impact of changes of business/corporate governance forms and practices on people, and the sustainability of different governance models. Articles that highlight models and structures that advance the interests, dignity and well being of all stakeholders, in a sustainable manner, are particularly welcome. The journal covers a broad spectrum of governance-related themes including: -Effective boardroom performance -Control and regulation -Executive leadership -The role and contribution of external (non-executive) directors -The growing importance of governance in the wake of ever-greater corporate scandals -Redefinitions and reassessments of corporate governance models -The role of business in society -The changing nature of the relationship and responsibilities of the firm towards various stakeholders -The incentives required to encourage more socially- and environmentally-responsible corporate action -The role and impact of local and international regulatory agencies and regimes on corporate behaviour.