Exploring board dynamics: implications for stock price stability in developing markets

Purpose This study aims to examine the relationship between board characteristics and stock price crash risk in developing markets, focusing on Iran. It explores how board attributes such as diversity, financial expertise, tenure, independence and stability influence stock price crash risk, aiming to provide insights for investors and companies on stock market stability. Design/methodology/approach The research uses a descriptive correlational design, analysing data from 152 companies listed on the Tehran Stock Exchange (TSE) from 2014 to 2021, totalling 1,217 firm-year observations. Multiple regression analysis is conducted using EViews software to assess the impact of various board characteristics on stock price crash risk. Findings Results indicate that board financial expertise, independence and CEO stability are negatively associated with stock price crash risk, whereas board chair stability shows a positive relationship. No significant relationship exists between gender diversity, senior management stability and crash risk. Originality/value This research adds to corporate governance literature by focusing on the unique context of a developing market like Iran, offering insights into how board dynamics affect stock market stability in diverse cultural and economic environments.