Independent Director Reputation Incentives,stock Price Informativeness And Stock Price Crash Risk

With the development of the modern corporate system,the position of independent director has emerged.As an important part of the board of directors,independent directors play an important role in improving corporate transparency and reducing the firm stock price crash risk.Through effective supervision,they can effectively prevent managers from hiding company-level trait information,especially negative information of some companies,thereby increasing the firm stock price informativeness and reducing the firm stock price crash risk.At present,academic research at home and abroad on independent directors’ research on stock price informativeness and stock price crash risk is based on the proportion of independent directors in the board of directors and the background of independent directors.Few studies have combined the independent director reputation incentives with stock price informativeness and stock price crash risks to consider their interactions.This article takes this as a starting point and uses reputation incentive as an independent director to actively supervise the manager.At the same time,it refers to the existing research literature and summarizes the existing research results.The Independent director reputation incentives are placed in the same framework as stock price informativeness and stock price crash risk,study the impact of independent director reputation incentives on stock price informativeness and stock price crash risk.An important reason for the stock price crash risk is the excessive accumulation of negative information of the company.Therefore,this paper further studies the mediation effect of the stock price informativeness when the independent director’s reputation incentives reduce the stock price crash risk.This paper selects the stock companies listed in Shanghai and Shenzhen stock exchanges from 2007 to 2017 as the research object,and obtains a total of 9124 unbalanced panel observations.Using the fixed effect model,it is found through empirical tests: First,the independent director reputation incentives is positively related to the stock price informativeness,and reputation incentive is an effective means to improve the information content of the company’s stock price.In order to establish,maintain and enhance their reputation,independent directors will strengthen the supervision of the management level,effectively prevent the manager from hiding the company-level information,thus effectively improving the firm stock price informativeness;Second the independent director reputation incentives is negatively correlated with the firm stock price crash risk.Reputational incentives can give full play to the supervisory role of independent directors on the management level,and supervise the behavioral decisions of managers,especially the hidden behavior of some negative information,reducing firm stock price crash risk;Third the stock price informativeness plays a partial mediating effect when the independent director reputation incentives reduce stock price crash risk,that is,the reputational incentives of independent directors are achieved by reducing the company’s stock price crash risk,but not by completely improving the company’s stock price informativeness.