diff --git a/flang/lib/Semantics/check-allocate.cpp b/flang/lib/Semantics/check-allocate.cpp
index 823aa4e795e35..d7772da210917 100644
--- a/flang/lib/Semantics/check-allocate.cpp
+++ b/flang/lib/Semantics/check-allocate.cpp
@@ -439,7 +439,7 @@ static bool HaveCompatibleLengths(
         evaluate::ToInt64(type1.characterTypeSpec().length().GetExplicit())};
     auto v2{
         evaluate::ToInt64(type2.characterTypeSpec().length().GetExplicit())};
-    return !v1 || !v2 || *v1 == *v2;
+    return !v1 || !v2 || (*v1 >= 0 ? *v1 : 0) == (*v2 >= 0 ? *v2 : 0);
   } else {
     return true;
   }
@@ -452,7 +452,7 @@ static bool HaveCompatibleLengths(
     auto v1{
         evaluate::ToInt64(type1.characterTypeSpec().length().GetExplicit())};
     auto v2{type2.knownLength()};
-    return !v1 || !v2 || *v1 == *v2;
+    return !v1 || !v2 || (*v1 >= 0 ? *v1 : 0) == (*v2 >= 0 ? *v2 : 0);
   } else {
     return true;
   }
diff --git a/flang/test/Semantics/bug163242.f90 b/flang/test/Semantics/bug163242.f90
new file mode 100644
index 0000000000000..5e020aeb4dc0d
--- /dev/null
+++ b/flang/test/Semantics/bug163242.f90
@@ -0,0 +1,5 @@
+!RUN: %flang -fc1 -fsyntax-only %s | FileCheck --allow-empty %s
+!CHECK-NOT: error:
+character(0), allocatable :: ch
+allocate(character(-1) :: ch)
+end