Do confucianism and political connections affect stock price crash risk: evidence from Chinese economy?

Usman Bashir and Yugang Yu

Applied Economics Letters, 2020, vol. 27, issue 7, 569-575

Abstract: Utilizing a large dataset on Chinese A-Share listed firms comprising 18763 firm-year observation for the period of 2001–2015, we examined whether Confucianism and political connections lessen the stock price crash risk of firms by using geographical-proximity-based Confucianism variables. Our findings point towards the evidence that firms situated in China with higher levels of Confucianism reveal low levels of stock price crash risk and this relationship is incrementally significant for politically connected firms while controlling for a battery of control variables. Our results are robust by using alternate proxies.

Date: 2020
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DOI: 10.1080/13504851.2019.1644418

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