The dark side of executives' professional background: Evidence from Chinese firm's stock price crash risk

It is unclear whether and how the CEO's financial background influences a firm's stock price crash risk. We take a sample of China's listed firms to empirically explore this association. The study finds that the CEO's financial background has a positive impact on the stock price crash risk. Besides, we find the mediating influence of earnings management in this nexus as CEOs with a financial background use their expertise to engage in real activity earnings management. Further analysis reveals that the association between CEO's financial background and stock price crash risk gets more pronounced in non‐state enterprises and with CEO power.