CFO cultural background and stock price crash risk

We investigate the relation between the cultural background of chief financial officers (CFOs) and stock price crash risk. Using a novel single-country setting in the U.K. market, we find robust evidence that CFOs from cultural backgrounds that emphasise uncertainty avoidance are negatively associated with firms’ stock price crash risk. Our evidence further shows that the effect of CFO uncertainty avoidance is more pronounced for firms with higher information asymmetry and riskiness, and when CFOs have a greater ability to influence firm decisions. Overall, the results shed light on the important role of CFO cultural background for firm policies and outcomes.