EconPapers    
Economics at your fingertips  
 

Local speculative culture and stock price crash risk

Jingjing Zuo, Baoyin Qiu, Guoyiming Zhu and Guangyong Lei

Research in International Business and Finance, 2023, vol. 64, issue C

Abstract: Using unique city gambling conviction data in China as a proxy for a local speculative culture, we examine the impact of such a culture on stock price crash risk. We find that firms in regions with a stronger speculative culture are more likely to experience future stock price crash risk. The results are consistent after using 2SLS regression analysis (IV) and staggered difference-in-difference (DID) analysis to mitigate endogeneity concerns. Further analysis shows that overinvestment, excessive debt, accounting conservatism and charitable donations are the main channels through which local speculative culture affects stock price crash risk. We also find that the positive relationship between local speculative culture and stock price crash risk is more salient for small firms and firms with managers with a cultural backgrounds similar to the local culture. Our study implies that the local culture plays an important role in the practice of corporate governance.

Keywords: Speculative culture; Gambling; Stock price crash risk; Informal institution (search for similar items in EconPapers)
JEL-codes: D21 G10 G31 M14 (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0275531922002379
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:64:y:2023:i:c:s0275531922002379

DOI: 10.1016/j.ribaf.2022.101851

Access Statistics for this article

Research in International Business and Finance is currently edited by T. Lagoarde Segot

More articles in Research in International Business and Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu (repec@elsevier.com).

 
Page updated 2024-12-28
Handle: RePEc:eee:riibaf:v:64:y:2023:i:c:s0275531922002379