CEO power and stock price crash risk in China: do female directors’ critical mass and ownership structure matter?

This study investigates how CEO power is associated with stock price crash risk. We further examine the moderating roles of female directors’ critical mass and ownership structure on the relationship between CEO power and stock price crash risk. Employing one of the largest datasets to-date of Chinese listed firms over the 2005-2015 period (13,421 firm-year observations), we find that CEO’s power to increase the likelihood of stock price crash risk is significantly mitigated when the percentage of: (a) female directors; and (b) ownership by blockholders and institutions, is high within firms. We interpret our findings within a theoretical framework that draws insights from neo-institutional, managerial power and critical mass theories. The findings are robust to the use of alternative measures, estimation methods and endogeneity issues