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Executive financial background, external audit quality and shadow banking in non-financial firms

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  • Huang, Xiaodong
  • Luo, Lingling

Abstract

The absence of formal financial services in the face of the actual economy's transition from old to new sources of energy and development modes has led to the emergence of a widespread shadow banking sector. Based on the high-order ladder theory, this paper examines the influence of executives' financial background on non-financial firms' shadow banking. The finding reveals a positive impact of executive financial backgrounds on non-financial firms' shadow banking, mainly driven by the executives' non-banking financial experiences, primarily contributing to the shadow credit chain model. Additionally, high-quality external audits discourage management from engaging in blind shadow banking activities.

Suggested Citation

  • Huang, Xiaodong & Luo, Lingling, 2024. "Executive financial background, external audit quality and shadow banking in non-financial firms," Finance Research Letters, Elsevier, vol. 64(C).
    • Handle: RePEc:eee:finlet:v:64:y:2024:i:c:s1544612324004276
    DOI: 10.1016/j.frl.2024.105397
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    References listed on IDEAS

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    1. repec:eme:mfppss:mf-12-2020-0606 is not listed on IDEAS
    2. Jin, Xiao Meng & Mai, Yong & Cheung, Adrian Wai Kong, 2022. "Corporate financialization and fixed investment rate: Evidence from China," Finance Research Letters, Elsevier, vol. 48(C).
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    Cited by:

    1. Chen, Zhenni & Li, Bin & Lou, Xinna & Liang, Yilan & Feng, Tong, 2025. "Is the increasing carbon pressure an incentive or obstacle to corporate creativity? Evidence from Chinese listed firms," Structural Change and Economic Dynamics, Elsevier, vol. 74(C), pages 186-201.
    2. Wang, Xuecheng & Zhang, Fafu, 2025. "Impacts of China's social credit reform on firm investment efficiency: Evidence from a quasi-natural experiment in China," Pacific-Basin Finance Journal, Elsevier, vol. 93(C).
    3. Wang, Shuo & Huang, Deming, 2025. "Competition policy and corporate governance: A quasi-natural experiment based on the implementation of the Anti-Monopoly Law," Finance Research Letters, Elsevier, vol. 81(C).
    4. Sun, Tongtong & Xie, Ziliang & Song, Yunxing & Lu, Maopeng, 2025. "Executives' financial background, corporate financialization and corporate innovation," International Review of Financial Analysis, Elsevier, vol. 106(C).

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