Business

Board diversity and stock price crash risk: exacerbate or mitigate

D. Yuan, D. Shang, et al.

This paper explores how board diversity can significantly reduce stock price crash risk in the Chinese A-share market. Discover how diversity not only lowers agency costs but also enhances information disclosure. This pivotal study is conducted by Dongliang Yuan, Duo Shang, and Xinmei Wu.

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Playback language: English

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Abstract

This paper investigates the impact of board diversity (BD) on stock price crash risk (SPCR) in the Chinese A-share market from 2010 to 2020. Using a multidimensional BD index, the study finds that BD mitigates SPCR. This finding remains robust after controlling for endogeneity and conducting various validity tests. Four mechanisms are identified through which BD reduces SPCR: reducing agency costs, alleviating inefficient investments, improving information disclosure, and promoting diverse executive appointments.

Publisher

Humanities and Social Sciences Communications

Published On

Oct 01, 2024

Authors

Dongliang Yuan, Duo Shang, Xinmei Wu

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