Insider trading, gender diversity within the board room, CEO pay gap, and stock price crash risk

Article


Viet, L., Nguyen, A. and Gregoriou, A. 2022. Insider trading, gender diversity within the board room, CEO pay gap, and stock price crash risk. International Journal of Finance & Economics. https://doi.org/10.1002/ijfe.2731
TypeArticle
TitleInsider trading, gender diversity within the board room, CEO pay gap, and stock price crash risk
AuthorsViet, L., Nguyen, A. and Gregoriou, A.
Abstract

This paper investigates the impact of insider trading and managerial attributes on future stock price crashes. We conduct a series of regressions addressing the managerial attributes determinants of future stock price crashes including gender diversity, CEO age, and CEO power (measured by CEO pay disparity, CEO tenure and CEO duality). Our empirical results reveal a positive association between insider purchases and price crash risk. This implies that other than compensation and career concerns, insiders hoard bad news to fulfil their trading incentives. Our positive coefficients of insider sales also suggest that insider sellers can assess inside information promptly and anticipate shortly before the crashes. We further document that the presence of female directors on boards can mitigate stock price crash risk. However, firms with powerful or younger Chief Executive Officers are more likely to experience crashes. Overall, we highlight the importance of corporate managerial attributes in dealing with information asymmetry problems.

KeywordsCEO pay disparity; gender diversity; insider returns; price crash risk
Sustainable Development Goals5 Gender equality
8 Decent work and economic growth
Middlesex University ThemeSustainability
PublisherWiley
JournalInternational Journal of Finance & Economics
ISSN1076-9307
Electronic1099-1158
Publication dates
Online24 Nov 2022
Publication process dates
Deposited21 Oct 2022
Submitted15 Jan 2021
Accepted20 Oct 2022
Output statusPublished
Publisher's version
License
File Access Level
Open
Accepted author manuscript
File Access Level
Restricted
Copyright Statement

© 2022 The Authors. International Journal of Finance & Economics published by John Wiley & Sons Ltd.
This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.

Digital Object Identifier (DOI)https://doi.org/10.1002/ijfe.2731
Web of Science identifierWOS:000890719300001
LanguageEnglish
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