Managerial slack, information environment and stock price crash risk: Evidence from China

Existing literature explores slack’s dual roles but pays limited attention to the capital-market risk consequences of managerial slack, defined as excess discretionary administrative resource consumption that generates capacity for sustained bad-news concealment. Drawing on a sample of Chinese A-share listed firms spanning 2000-2025, this paper examines the association between managerial slack and stock price crash risk. We document a positive and robust association, which survives a comprehensive set of robustness and endogeneity tests. Rather than merely amplifying managerial opportunistic incentives, managerial slack lowers the resource-driven marginal cost of bad-news concealment. This relationship operates through a deteriorated corporate information environment, reflected in elevated market information opacity and weakened financial reporting quality. The effect is more pronounced among state-owned enterprises, financially constrained firms, and firms receiving limited retail investor attention. From a resource capacity perspective, these results underscore the destabilizing role of managerial slack and offer actionable insights for investor protection and corporate risk governance in emerging markets.