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The dark side of marital leadership: Evidence from China

Shouyu Yao, Weijia Zhao, Ahmet Sensoy, Feiyang Cheng and John W. Goodell

International Review of Financial Analysis, 2021, vol. 77, issue C

Abstract: Using a unique dataset of Chinese private firms, we find that marital leadership is associated with higher propensity for financial fraud. We examine the potential economic mechanisms that lead to this result, finding that weak internal supervision and inefficient decision-making provide crucial linkages between marital leadership and financial fraud. However, well-functioning corporate governance mechanisms reduce the negative effects of marital leadership. Our findings provide important empirical evidence for the effect of family involvement in corporate governance and contribute to the literature on the determinants of financial fraud in listed firms.

Keywords: Marital leadership; Financial fraud; Corporate governance; China (search for similar items in EconPapers)
JEL-codes: G30 G32 G38 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1016/j.irfa.2021.101844

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