The role of agency theory in stock price crashes during the COVID-19 crisis
Abstract
This study tests the empirical relevance of agency theory in explaining stock price crashes in U.S. firms. We construct two novel multidimensional indices of managerial opportunism using a broad set of agency-related variables linked to bad news hoarding. Using the as a natural experiment, we examine whether crisis-induced survival pressures intensify the relation between agency problems and the release of previously withheld bad news. Contrary to expectations, we find no significant association between the agency-based indices and future crashes. These findings challenge the traditional agency-based crash risk explanations and underscore the need to explore alternative mechanisms.
Fields of Study & Subjects
COVID-19 Pandemic Impacts
Corporate Finance and Governance
Financial Markets and Investment Strategies
Publication details
- Journal / source
- Kypseli
- Publisher
- Elsevier BV
- Volume
- 258
- Pages
- 112730
- Publication date
- 1 January 2026
- Language
- EN