Government debt and stock price crash risk: International Evidence

Hamdi Ben-Nasr and Sabri Boubaker

Journal of Financial Stability, 2024, vol. 72, issue C

Abstract: We add to the literature on the economic outcomes of government debt and argue that government debt increases crash risk via two channels: (i) hoarding bad news and (ii) tax avoidance. Based on a large international sample, our results indicate that stock crash risk is positively associated with government debt. Our conclusions are robust when we treat endogeneity issues, and our tests confirm the validity of bad news hoarding and tax avoidance as channels through which government debt influences stock price crash risk.

Keywords: Government debt; Fiscal policy uncertainty; Bad news hoarding; Tax avoidance; Crash risk (search for similar items in EconPapers)
JEL-codes: E62 G12 G14 G38 H63 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1572308924000305
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:finsta:v:72:y:2024:i:c:s1572308924000305

DOI: 10.1016/j.jfs.2024.101245

Access Statistics for this article

Journal of Financial Stability is currently edited by I. Hasan, W. C. Hunter and G. G. Kaufman

More articles in Journal of Financial Stability from Elsevier
Bibliographic data for series maintained by Catherine Liu ().