Silence is golden? Responses to rumors by Chinese listed firms

Kaiyi Liu, Xianghui Yuan, Chen Wang and Wenxuan Hou

Finance Research Letters, 2022, vol. 49, issue C

Abstract: Rumors are common in capital markets and firms face a strategic decision of whether or not to respond to them. This research explores the implications of official response to rumors and find that responded firms tend to experience enforcement actions against corporate fraud and lawsuits. The results are concentrated on private firms. Our results are in line with the agency theory interpretation of firms’ response to rumors.

Keywords: Rumor; Information environment; Corporate governance; Fraud; Lawsuit (search for similar items in EconPapers)
JEL-codes: G15 G30 K22 M41 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:49:y:2022:i:c:s1544612322002884

DOI: 10.1016/j.frl.2022.103055

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