The Mediating Role of Sustainability Disclosure in the Relationship between CEO Characteristics and Stock Price Crash Risk- An Empirical Study

This study examines whether sustainability disclosure (ESG measured by environmental disclosure, social information, and corporate governance information) disclosure mediates the relationship between CEO characteristics (measured by stock ownership, experience, financial qualifications, CEO gender, and innovative ability) and stock price crash risk, using a sample of companies listed on the Egyptian Stock Exchange from 2017 to 2023.
The results of the study provided empirical evidence indicating a significant negative relationship between CEO characteristics, measured by stock ownership, experience, financial qualifications, and innovative ability, and stock price crash risk. However, CEO gender was found to have insignificant relationship on stock price crash risk. Furthermore, the results show a significant positive relationship between CEO characteristics measured by stock ownership, experience, financial qualifications, and innovation ability and ESG disclosure, while CEO gender remained insignificant on stock price crash risk.
In addition, the study found a significant negative relationship between ESG disclosure and stock price crash risk.
Finally, the study found that ESG disclosure mediates the relationship between CEO characteristics measured by stock ownership, experience, financial qualifications, and innovative ability, and stock price crash risk. However, no significant indirect relationship was found for CEO gender on the stock price crash risk in the presence of ESG disclosure as mediating variables.
The study recommends that future research should investigate the impact of CEO characteristics on stock price crash risk using artificial intelligence techniques, such as machine learning, to align with the objectives of Vision 2030. Additionally, it suggests considering external economic factors, such as GDP and inflation, as well as geopolitical factors. Lastly, the study encourages international comparative studies on the role of ESG disclosure in shaping the relationship between CEO capabilities and stock price crash risk.