To answer the question what causes an asset to be illiquid, we analyze the impact that transparency of corporate accounting information has on the liquidity of its traded bonds. In particular, we focus on how this relationship depends on aggregate liquidity and the financial state of the firm....

This paper examines the association between abnormally long audit report lag and future stock price crash. Audit report lag is defined as the period between a company's fiscal year end and the audit report date, and is informative about audit efficiency. Although a substantial body of literature...

This study shows that less readable 10-K reports are associated with higher stock price crash risk. The results are consistent with the argument that managers can successfully hide adverse information by writing complex financial reports, which leads to stock price crashes when the hidden bad...

This study examines the association between chief executive officer (CEO) overconfidence and future stock price crash risk. Overconfident managers overestimate the returns to their investment projects and misperceive negative net present value (NPV) projects as value creating. They also tend to...

In this study, we examine how banks' stock price crash risk is affected by recourse uncertainty embedded in securitizations. By recourse uncertainty, we mean the difficulty for equity market participants to assess the true extent of risk transfer between securitizing banks and investors in...

This paper explains the treatment of sovereign risk in macroprudential solvency stress testing, based on the experiences in the Financial Sector Assessment Program (FSAP). We discuss four essential steps in assessing the system-wide impact of sovereign risk: scope, loss estimation, shock...

Does growth lead to stock price crashes? In this study, we find that total asset growth positively relates to future crash risk and the relationship is robust for various asset, liability, and equity components of the balance sheet. Consistent with the managerial empire-building incentive,...

We investigate whether non-GAAP earnings disclosures increase stock price crash risk. Consistent with the notion that non-GAAP reporting allows managers to downplay reported bad news in GAAP earnings and re-direct investors' attention to the more positive aspects of performance, our empirical...

An emerging stream of research documents that experience of traumatic events early in a CEO's life influences the firm's investment and financing choices. We extend this research by examining the impact of CEO early-life natural disaster experience on stock price crash risk. Using a longitudinal...

This study investigates whether and how the deviation of cash flow rights (ownership) from voting rights (control), or simply the ownership-control wedge, influences the likelihood that extreme negative outliers occur in stock return distributions, which we refer to as stock price crash risk. We...