ScholarWorks@동국대학교

초록

This paper investigates the consequences of stock price crashes. I find that stock price crash risk subsequently reduces managerial confidence levels, as proxied by the CEO's option-based and earnings call transcript's text-based measures. I also find that stock price crash risk reduces CEO compensation and equity incentives, suggesting that a firm seeks to adjust managerial incentives after its stock price crashes to prevent future occurrences. Furthermore, CEOs with high confidence are more likely to curtail overinvestment after their crash experiences relative to others, thereby contributing to shareholder value. Overall, this paper provides novel evidence that CEOs and firms appear to learn from their experiences of stock price crashes, suggesting that stock price crashes may induce experience-driven conservatism that influences CEO and corporate decisions.

키워드