Abstract/Summary

This thesis revolves around the topic of corporate governance. Chapter 1 provides an overview of the research topics. Chapter 2 examines the relationship between CEOs’ generalist and specialist managerial skills and future stock price crash risk. Using nearly 20,000 firm-year observations across North American firms from 1995 to 2015, we find weak evidence that generalist CEOs are positively associated with future stock price crash risk. We conjecture that this may be the case because generalist CEOs frequently change jobs and are less engaged with their current position. Chapter 3 studies the importance of effective board governance and presents some empirical evidence that board monitoring quality is negatively associated with future stock price crash risk. The empirical tests use more than 3,000 firm-year observations from North American firms from 2009 to 2020. The chapter includes some CEO characteristics that can potentially change the politics and dynamics of the board and thus affect the monitoring quality over time. The conclusion remains with the inclusion of these variables and finds that boards that offer high monitoring quality can help prevent extreme consequences. The research provides an alternative view of the motivation of directors and offers suggestions on how to improve board governance. Chapter 4 summarizes the conclusions of the study.