Couple-based leadership and default risk: Evidence from China

Weijia Zhao, Xin Cui, Chunfeng Wang, Ji Wu and Feng He

International Review of Economics & Finance, 2022, vol. 80, issue C, 439-463

Abstract: This paper investigates how leadership by married couples (marital leadership) affects the default risk of listed firms. Using unique manually collected data from China, we show that marital leadership significantly increases default risk. The relationship is robust after conducting a series of robustness tests and controlling for endogenous problems. In addition, we find that the prominent agency conflict, inefficient decision-making, and supervision led by married couples limit the willingness and ability to execute contracts, which leads to higher default risk. Furthermore, we also provide evidence that the effect of marital leadership on default risk varies across firm characteristics and the market environment, where it is stronger for firms with small-cap, low-risk resistance and when economic policy uncertainty is higher.

Keywords: Marital leadership; Default risk; Corporate governance; The Chinese stock market (search for similar items in EconPapers)
JEL-codes: G30 G32 G38 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:80:y:2022:i:c:p:439-463

DOI: 10.1016/j.iref.2022.02.071

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