Block-ownership structure, bank nominee director and crash-risk
No Thumbnail Available
Syamala, Sudhakar Reddy
We study the effect of outside block-ownership on the future firm-specific crash-risk of Indian firms. Major and dedicated block-owners play a significant role in aggravating the firm’s susceptibility towards crash-risk. Within a novel regulatory setup in India, where borrowing firms are entitled to a bank nominated board-member, we find an ancillary influence of bank nominee’s presence in dissipating block-owners influence on firm-level crash-risk. These results support the monitoring hypothesis in alleviating future firm-level crash-risk. Our results are robust to alternate model specifications, different crash-risk and block-ownership measures, clustering, and an array of control variables.
Agency problem , Bank nominee , Block-ownership , Crash-risk
Chauhan, Y., Wadhwa, K., Syamala, S. R. and Goyal, A. (2015) 'Block-ownership structure, bank nominee director and crash-risk', Finance Research Letters, 14, pp. 20-28. doi: 10.1016/j.frl.2015.07.002