IDEAS home Printed from https://ideas.repec.org/a/taf/rcjaxx/v7y2019i1p25-61.html
   My bibliography  Save this article

Confucian culture and stock price crash risk

Author

Listed:
  • Xixiong Xu
  • Wanli Li
  • Xichan Chen

Abstract

Using a sample of Chinese-listed firms during the period from 2008–2017, this paper investigates the impact of Confucian culture on stock price crash risk and its underlying mechanism. We find that Confucianism is significantly negatively associated with firm-specific crash risk. Further channel tests show that Confucian culture curbs crash risk mainly through mitigating agency conflict, improving financial information quality and restraining managerial overconfidence. Moreover, we also document that the negative association between Confucianism and crash risk is more prominent in firms with weaker corporate governance and lower analyst coverage. Our findings suggest that Confucian ethics, as an implicit norm and alternative mechanism of formal institutions plays a critical role in preventing stock price crash and promoting the healthy development of capital market. This study not only enriches the literature on stock price crash risk but also deepens theoretical cognition of the positive value of Confucian culture from firm-level.

Suggested Citation

  • Xixiong Xu & Wanli Li & Xichan Chen, 2019. "Confucian culture and stock price crash risk," China Journal of Accounting Studies, Taylor & Francis Journals, vol. 7(1), pages 25-61, January.
    • Handle: RePEc:taf:rcjaxx:v:7:y:2019:i:1:p:25-61
    DOI: 10.1080/21697213.2019.1625577
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/21697213.2019.1625577
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/21697213.2019.1625577?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ruwei Zhao & Ruixin Fan & Xiong Xiong & Jianli Wang & Jitka Hilliard, 2023. "Media Tone and Stock Price Crash Risk: Evidence from China," Mathematics, MDPI, vol. 11(17), pages 1-14, August.
    2. Tan, Huan & Wang, Zhi, 2023. "The impact of confucian culture on the cost of equity capital: The moderating role of marketization process," International Review of Economics & Finance, Elsevier, vol. 86(C), pages 112-126.
    3. Minghui Li & Chaohai Shen & Mengyao Wen, 2023. "The Effect of Firm-Specific Environmental Punishment on Stock Price Crash Risk: Evidence From China," SAGE Open, , vol. 13(4), pages 21582440231, October.
    4. Kong, Xiaoran & Xu, Siping & Liu, Ming-Yu & Ho, Kung-Cheng, 2023. "Confucianism and D&O insurance demand of Chinese listed companies," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).
    5. Min Huang & Xiaobo Li & Jun Xia & Mengyao Li, 2024. "Does Confucianism Prompt Firms to Participate in Poverty Alleviation Campaigns?," Journal of Business Ethics, Springer, vol. 189(4), pages 743-762, February.
    6. Song, Jie & Liang, Shangkun & Zhen, Yuhan, 2023. "Does CEO-auditor dialect sharing affect stock price crash risk? Evidence from China," Finance Research Letters, Elsevier, vol. 57(C).
    7. Xu, Xixiong & Duan, Lingling, 2023. "Confucianism and employee stock ownership plans: Evidence from Chinese listed firms," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 859-872.
    8. Hou, Fei & Shen, Huayu & Wang, Ping & Xiong, Hao, 2023. "Signing auditors' cultural background and debt financing costs," International Review of Financial Analysis, Elsevier, vol. 87(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:rcjaxx:v:7:y:2019:i:1:p:25-61. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/rcja .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.