China’s Closed Pyramidal Managerial Labor Market and the Stock Price Crash Risk
Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review
Author(s)
Related Research Unit(s)
Detail(s)
| Original language | English |
|---|---|
| Pages (from-to) | 105-131 |
| Journal / Publication | The Accounting Review |
| Volume | 93 |
| Issue number | 3 |
| Online published | Jul 2017 |
| Publication status | Published - May 2018 |
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Abstract
Managers of China’s state-owned firms work in a closed pyramidal managerial labor market. They enjoy non-transferable benefits if they choose to stay within this system. The higher up are they in this labor market hierarchy (their political ranks), the fewer are their outside employment opportunities. Due to career and wealth concerns, they are cautious and risk-averse when managing firms. We examine the effect of managers’ political ranks on firms’ stock price crash risk and find a negative association. This association mainly exists in firms with younger managers and managers with shorter tenure. Further, this effect is only significant in regions with weak market forces, in firms without foreign investors, without political connections, and during periods with no local government leaders’ or managers’ political promotions. We conclude that the political ranking system reduces the stock price crash risk.
Research Area(s)
- internal labor market, political ranks, stock price crash risk, china
Bibliographic Note
Research Unit(s) information for this publication is provided by the author(s) concerned.
Citation Format(s)
China’s Closed Pyramidal Managerial Labor Market and the Stock Price Crash Risk. / Chen, Donghua; Kim, Jeong-Bon; Li, Oliver Zhen et al.
In: The Accounting Review, Vol. 93, No. 3, 05.2018, p. 105-131.
In: The Accounting Review, Vol. 93, No. 3, 05.2018, p. 105-131.
Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review
