Supervisory capability of supervisor board, incentives to supervisor board, and stock price crash risk

Abstract

We analyzed the impact of the supervisory capability of the supervisory board and the incentive to the supervisory board on stock price crash risk. We found that the exercise quality of the members of the supervisory board will affect stock price crash risk. The improvement of their education degree can inhibit the risk of the stock price crash, and there is a negative correlation between the average age of the members and stock price crash risk. In terms of supervision incentives, the higher the shareholding ratio of the supervisory board and the higher the proportion of unpaid supervisors, the lower the stock price crash risk.

Two-tier board characteristics and expanded audit reporting: Evidence from China

“…This is a consequence of supervisors' contributions to improving information quality and reducing firm risk, which is likely to drive the auditor to disclose a lower number and less lengthy content of KAMs. Moreover, our results support prior research (e.g., Ji et al 2015a, b;Yin et al 2021) that the independence of the supervisory board increases the board's effectiveness to perform the supervisory function, increasing the financial reporting quality. That is, an auditor is likely to convey a lower number and content of KAMs in such a context.…”

“…Ji et al (2015a, b) find that firms with higher supervisory board independence are less likely to disclose internal control weaknesses. Yin et al (2021) find that supervisory board independence improves the effectiveness of corporate governance and reduces stock price crash risk. Therefore, the independence of the supervisory board is likely to help in addressing challenging, subjective, or complex areas related to accounts or disclosures that are material to the financial statements.…”

The impact of green financial development on stock price crash risk from the perspective of information asymmetry in Chinese listed companies

“… 2022 ), supervisor characteristics (Yin et al. 2022 ), and other features, as well as internal environmental factors, such as corporate social responsibility (Bae et al. 2021 ), employee relations (Zuo et al.…”