Empirical Analysis Of The Influence Of The Heterogeneity Of Management Tenure On The Risk Of Stock Price Crash

The economic consequences of the crash of the stock price are very serious,which not only harm the interests of investors,but also hinder the healthy development of the capital market.Therefore,what factors will aggravate the risk of stock price crash and how to reduce the risk of stock price crash becomes a hot issue that needs to be solved in theoretical and practical circles.There are two different schools of thought about the cause of the risk of stock price crash.The first category takes the whole stock market as the research object,and the second category takes the individual stocks as the research object.The view that take the whole market as a research object emphasizes the influence of trading mechanism on the stock price crash.The representative theory is proposed by Hong and Stein(2003).They argue that investors do not have homogenous expectations about the price of stocks,but rather that they have heterogeneous beliefs,some optimistic and pessimistic.At the same time,the existence of short-selling restriction excludes pessimistic investors from the market,so that the stock price can not reflect the sentiment of the pessimistic investors,and can only partially reflect the mood of the optimist.As share prices continue to rise,pessimism accumulates,and when the market is hit by a bearish mood,the sudden release of pessimism leads to a collapse in share prices.Therefore,Hong and Stein(2003)believe that short selling can fundamentally solve the problem of stock price collapse.However,in 2015,the crash of stock market in China proved that the short selling mechanism could not effectively solve the problem of stock price crash.In fact,the extremely optimistic and pessimistic of the investors,which caused by information asymmetry is the root cause of extreme changes in share prices,improve the enterprise information transparency is the ease of stock price crash risk.In line with this idea,domestic scholars began to shift the focus of study from the entire stock market to individual stocks.The view that take a single stock as the research object of the stock price crash risk theory argued that information management caused by agency conflicts and overconfident managers lead to share price crash.Further,the risk of a stock price crash is a nasty economic consequence of inefficient corporate governance essentially.Therefore,improving corporate governance is the fundamental way to mitigate the risk of stock price collapse.The heterogeneity of management tenure is the difference between the term of management members.According to relevant literature,the heterogeneity of management team's tenure can influence the behavior of management.For example,it can hinder communication between management and reduce the frequency of communication among team members,which is not conducive to enhancing team cohesion,and can lead to distrust and value differences among team members(Ancona and Caldwell,1992;Jackson et al.,1991;O'Reill et al.,1993;Katz,1982).From a certain extent,communication barriers and distrust between team members caused by the heterogeneity of management tenure should go against collusion between team members,which ease the management to damage to the interests of shareholders to a certain extent.From this perspective,the heterogeneity of management tenure should have a positive corporate governance effect,but it is not given enough attention.To sum up,due to a good corporate governance environment can fundamentally mitigate the risk of.a stock price crash,at the same time,the heterogeneity of management tenure may have a positive effect of corporate governance,therefore,this article attempts choose the heterogeneity of management tenure as the research perspective to investigate the cause of the stock price crash risk,which can expand the academic understanding of the causes of stock price crash risk.This paper has important theoretical and practical significance.From a theoretical point of view,first,the literature about the cause of stock price crash risk,attach more importance to the role of the formal system of corporate governance,but lack of attention to the non-systematic factors,and this paper studies the influence of the heterogeneity of management tenure on enterprise stock price crash risk,which enrich the research field of stock price crash risk.Second,demographic characteristics were introduced into the study of stock price crash risk in some of the literature,but the differences in management demographic characteristics between the members were of the lack of attention,this article focuses on the positive role of the heterogeneity of management tenure on stock price crash risk,which enrich the background characteristics of the related research in the field of enterprise management.Third,this article focuses on the positive role of the heterogeneity of management tenure in corporate governance,which is conducive to academia and practice on management term heterogeneity in the understanding of the role in enterprise management.The practical significance of this paper is that,first,from the external investors point of view,as the most direct victims of share price crash,they need to build a set of index system to evaluate the possibility of crash risk of stock,whereas,our study provides certain theoretical basis to stock investment decision.Secondly,from the perspective of enterprise personnel arrangement,this paper provides a theoretical basis for management personnel arrangement from the perspective of demographic characteristics of management.Finally,,from the external regulators perspective,This paper starts from the heterogeneity of management term,the perspective of the institutional factors,to explore the effect of corporate governance,to a certain extent,provided the necessary evidence for external regulators work.In the research method,this paper uses normative research method and empirical research method.Based on social identity theory,stock price crash risk theory,CEO power theory,large shareholder ownership theory and property rights theory,this paper constructs the logical framework of the study.At the same time,in this paper,we integrated use of correlation analysis,univariate analysis,regression analysis,grouping panel data regression analysis,.the instrumental variable method of endogenous econometric tools such as inspection and intermediary effect.And with China's A-sharg listed companies as research samples,by building the difference of tenure between CEO and CFO,the difference of tenure between chairman and CEO as proxy variable of corporate management tenure heterogeneity,and the stock price crash risk as a proxy variable of corporate governance environment,we investigate the management term heterogeneity effects on corporate governance.The specific research contents and conclusions of this paper are as follows:Firstly,this paper examines the influence of the heterogeneity of management tenure on the stock price crash.During the study,we choose China's A-share listed companies from 2001 to 2016 as samples,and select the difference of tenure between CEO and CFO as well as the difference of tenure between chairman and CEO as proxy variables of management term heterogeneity respectively,and studied the relationship between the two variables and the stock price crash risk respectively.The study found that both the CEO and CFO's staggered tenure and the staggered tenure of chairman and CEO can effectively inhibit the risk of stock price crash.This suggests that the heterogeneity of management tenure does inhibit the risk of price collapse.Secondly,this paper examines the internal mechanism that the heterogeneity of management tenure affect the risk of stock price crash by the mediation effect test.First of all,the heterogeneity of management tenure has an inhibitory effect on management agent behavior and overconfidence behavior.Second,both managers' agents and overconfidence can exacerbate the risk of a stock price crash.These two findings suggest that managers'agent and overconfidence is the intervening variable between management term heterogeneity and stock price crash risk,in other word,management term heterogeneity can inhibition of the stock price crash risk by ease managers' overconfident and agent.Finally,this paper makes a theoretical analysis and empirical test on the conditions that when and where the heterogeneity of management tenure can inhibition of the stock price crash risk.This paper analyzes the property rights,CEO power and shareholding of major shareholders respectively.The study found that for the difference of tenure between CEO and CFO can inhibition of the risk of stock price crash in the state-owned enterprises,but it was not significant in the the private enterprise.When the CEO is in power,the inhibition is not obvious;but when the CEO has less power,the inhibition is significant.At the same time,for the difference of tenure between chairman and CEO,it can significantly restrain the risk of stock price collapse in state-owned enterprises,but it is not significant in private enterprises.When the shareholding ratio of major shareholders is low,the inhibition effect on the stock price collapse is significant,but when the shareholding ratio of large shareholders is high,the effect is not significant.The above research results show that the effect of management tenure heterogeneity on the risk of stock price collapse has a context effect.The specific research contents and conclusions of this paper are as follows:Firstly,research perspective innovation.In this paper,in the process of investigation the root cause of the stock price crash risk,we select the corporate management term heterogeneity as the perspective,which not only enriched the stock price crash risk management research field,but also extended the term heterogeneity of management research scope.Secondly,mechanism innovation.Since Jin and Myers(2006)stock price crash risk theory based on agency problem has been put forward(Jin and Myers,2006),Based on the above theory,scholars from home and abroad have investigated the cause of the stock price crash risk from different point of view of business agency problem.However,Kim et al.(2016)found that overconfidence of managers could also course stock price crash.However,This point of view has hardly been paid attention to,because it was proposed late.In this paper,we examine the internal mechanism of management tenure heterogeneity to suppress the risk of stock price crash from the perspective of management agency and overconfidence.on the one hand,we further confirmed the correctness of the theory of Kim et al.(2016);on the other hand,we have enriched the study on formation cause of the stock price crash risk areas.Thirdly,research idea innovation.research content innovation.The influence of the heterogeneity of management tenure on the business results should be bidirectional,but the existing researches mainly focus on its negative role in the enterprises management.In fact,the communication barriers and distrust between management members caused by the heterogeneity of the tenure of corporate management have a positive corporate governance effect to a certain extent.Existing literature,however,did not give necessary attention.In this paper,We pay special attention to the positive role of management tenure heterogeneity in corporate governance,which undoubtedly improve the study on the heterogeneity of management tenure,and is conducive to a more comprehensive understanding of the heterogeneity of management tenure in theory and practice.