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Bankruptcy social cost, government intervention and stock price crash risk

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  • Jia, Haibo
  • Li, Chengxin
  • Li, Dong

Abstract

This paper examines the relationship between the social cost of bankruptcy and the risk of corporate stock price collapse through a study of China's A-share non-financial listed companies from 2012 to 2022. It is found that the higher a firm's social cost of bankruptcy is, the lower its firm share price crash risk is instead. In addition, the extent to which the social cost of insolvency affects the risk of firm share price collapse is enhanced in regions with less government intervention.

Suggested Citation

  • Jia, Haibo & Li, Chengxin & Li, Dong, 2024. "Bankruptcy social cost, government intervention and stock price crash risk," Finance Research Letters, Elsevier, vol. 64(C).
    • Handle: RePEc:eee:finlet:v:64:y:2024:i:c:s1544612324004793
    DOI: 10.1016/j.frl.2024.105449
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    References listed on IDEAS

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