Unveiling the Brew: Probing the Lingering Impact of the Luckin Coffee Scandal on the Liquidity of Chinese Cross-Listed Stocks

Lee Kersting, Jang-Chul Kim (), Sharif Mazumder and Qing Su
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Lee Kersting: Department of Accounting, Economics, and Finance, Haile College of Business, Northern Kentucky University, Highland Heights, KY 41099, USA
Jang-Chul Kim: Department of Accounting, Economics, and Finance, Haile College of Business, Northern Kentucky University, Highland Heights, KY 41099, USA
Sharif Mazumder: Department of Accounting, Economics, and Finance, Haile College of Business, Northern Kentucky University, Highland Heights, KY 41099, USA
Qing Su: Department of Accounting, Economics, and Finance, Haile College of Business, Northern Kentucky University, Highland Heights, KY 41099, USA

JRFM, 2024, vol. 17, issue 11, 1-12

Abstract: This paper investigates the impact of the Luckin Coffee accounting scandal on stock liquidity and spillover effects in the financial market, focusing on Chinese companies listed on U.S. exchanges. Utilizing event studies, we analyze eight pivotal events related to the scandal to examine stock liquidity and market quality changes. The results show a significant decline in Luckin’s stock liquidity during the scandal, while spillover effects on other Chinese stocks are limited. Comparisons with the Satyam accounting scandal suggest that individual company scandals may not substantially affect the liquidity of other stocks from the same country. The findings highlight the importance of robust regulatory frameworks and investor due diligence in safeguarding market integrity and restoring investor confidence.

Keywords: liquidity; information asymmetry; accounting scandal; spillover (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2024
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