The Value of Integrity: The Impact of Management Integrity on Corporate Financial Distress

Mo Yang, Sishi Yue and Dayong Dong

Emerging Markets Finance and Trade, 2025, vol. 61, issue 3, 627-640

Abstract: Using data on Chinese A-share listed firms from 2012 to 2022, we examine the impact of management integrity on corporate financial distress. Our findings reveal a significant negative association between management integrity and financial distress, highlighting the crucial role of management integrity in mitigating financial distress. This effect is particularly pronounced among non-state-owned firms, firms operating in regions with inadequate legal systems, and firms with good corporate governance. Moreover, we demonstrate that management integrity directly contributes to a decrease in capital costs, thereby reducing corporate financial distress.

Date: 2025
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DOI: 10.1080/1540496X.2024.2392773

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