Contents lists available at ScienceDirect Pacific-Basin Finance Journal journal homepage: www.elsevier.com/locate/pacfin Top managerial power and stock price efficiency: Evidence from China ☆ Meifen Qian a , Ping-Wen Sun b , Bin Yu c, ⁎ a School of Management, Zhejiang University, China b International Institute for Financial Studies and RCFMRP, Jiangxi University of Finance & Economics, China c School of Economics and Academy of Financial Research, Zhejiang University, China ARTICLE INFO JEL classification: G12 G14 G34 Keywords: Managerial power Stock price delay Accounting quality A-shares China ABSTRACT Using higher top managerial ownership, occurrence of CEO duality, and lower ownership of the controlling shareholder to proxy for higher top managerial power in China's A-shares, we find firms with higher top managerial power have higher stock price delay after controlling for li- quidity and investor attention variables. Moreover, top managerial ownership of SOE firms ex- hibits a lower influence on stock price delay than top managerial ownership of non-SOE firms, suggesting top managers' promotion incentive in SOE firms has the opposite effect to their equity incentive on stock price efficiency. Furthermore, our findings show that firms with higher top managerial power component of stock price delay exhibit lower quality of accruals, spend more time to release financial reports, and have higher chances of financial misconduct and that ac- counting quality measures associated with top managerial power significantly explain stock price delay, indicating top managerial power influences stock price efficiency through the accounting quality channel. Finally, our evidence shows that the Split-Share Structure Reform initiated in 2005 increases the influences of both top managerial ownership and ownership of the controlling shareholder on stock price delay and suggests that the anti-corruption campaign launched in 2012 restricts financial manipulations from top managers whereas decreases the incentives of the controlling shareholder to monitor top managers. 1. Introduction Top managers are the major agents for maximizing value for their principal shareholders. However, when making crucial de- cisions for the company, those managers are often faced with the dilemma of whether to maximize shareholders' value or to ex- propriate shareholders for their own personal benefits. A key factor in these decisions is how much power those managers have. If top managers of a firm have equity positions and are faced with less monitoring from shareholders, they may have stronger equity incentives to manipulate earnings to maximize their own benefits, as shown by Cheng and Warfield (2005) 1 . Moreover, if the CEO of a top management team is also the chairman of the board of directors, the CEO and his/her management team will have more decision power at their discretion. Therefore, for a firm with higher top managerial ownership, occurrence of CEO duality, and lower https://doi.org/10.1016/j.pacfin.2017.11.004 Received 25 May 2017; Received in revised form 25 October 2017; Accepted 27 November 2017 ☆ All errors are ours. We thank participants at the 2015 conference on cross-strait banking and finance. Ping-Wen Sun gratefully acknowledges the financial support from the National Natural Science Foundation of China (No. 71463018). ⁎ Corresponding author. E-mail addresses: meifenqian@zju.edu.cn (M. Qian), bin_yu@zju.edu.cn (B. Yu). 1 Cheng and Warfield (2005) hypothesize that managers with high equity incentives are more likely to sell shares in the future and this motivates these managers to engage in earnings management to increase the value of the shares to be sold. Pacific-Basin Finance Journal 47 (2018) 20–38 Available online 28 November 2017 0927-538X/ © 2017 Published by Elsevier B.V. T