IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v67y2024ipbs1544612324009188.html
   My bibliography  Save this article

Is it a matter of governance or judicial favoritism? Legal expertise at an executive level and its use in cases of corporate financial fraud

Author

Listed:
  • Nie, Yingzhi
  • Na, Yanhua
  • Chen, Peng

Abstract

This study examines how executives’ legal expertise affects corporate financial fraud and the mechanism behind this using data from A-listed companies between 2011 and 2021. Findings show a positive correlation between executives’ legal backgrounds and corporate financial fraud, which is mainly driven by external audit quality and corporate social responsibility. This finding provides evidence of how the law affects small-scale corporate governance. This study emphasizes the value of firms leveraging their executives’ legal background, which helps regulators identify potential hazards in corporations.

Suggested Citation

  • Nie, Yingzhi & Na, Yanhua & Chen, Peng, 2024. "Is it a matter of governance or judicial favoritism? Legal expertise at an executive level and its use in cases of corporate financial fraud," Finance Research Letters, Elsevier, vol. 67(PB).
    • Handle: RePEc:eee:finlet:v:67:y:2024:i:pb:s1544612324009188
    DOI: 10.1016/j.frl.2024.105888
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612324009188
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2024.105888?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

    for a different version of it.

    References listed on IDEAS

    as
    1. Achakzai, Muhammad Atif Khan & Peng, Juan, 2023. "Detecting financial statement fraud using dynamic ensemble machine learning," International Review of Financial Analysis, Elsevier, vol. 89(C).
    2. Liu, Yang & Zhang, Han & Zhang, Fukang, 2023. "CEO's poverty imprints and corporate financial fraud: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 81(C).
    3. repec:eme:mfppss:mf-12-2020-0606 is not listed on IDEAS
    4. Kong, Dongmin & Liu, Lihua & Liu, Shasha, 2020. "Market information traveling on high-speed rails: The case of analyst forecasts," Pacific-Basin Finance Journal, Elsevier, vol. 61(C).
    5. Zhou, Zhongsheng & Li, Zhuo, 2023. "Corporate digital transformation and trade credit financing," Journal of Business Research, Elsevier, vol. 160(C).
    6. Lin Liao & Guanting Chen & Dengjin Zheng, 2019. "Corporate social responsibility and financial fraud: evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 59(5), pages 3133-3169, December.
    7. Su, Fei & Guan, Mengyao & Liu, Yujie & Liu, Jia, 2024. "ESG performance and corporate fraudulence: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 93(C).
    8. Xing Li & Jeong-Bon Kim & Haibin Wu & Yangxin Yu, 2021. "Corporate Social Responsibility and Financial Fraud: The Moderating Effects of Governance and Religiosity," Journal of Business Ethics, Springer, vol. 170(3), pages 557-576, May.
    9. Sun, Guanglin & Li, Ting & Ai, Yongfang & Li, Qinghai, 2023. "Digital finance and corporate financial fraud," International Review of Financial Analysis, Elsevier, vol. 87(C).
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Shang, Zhaoyan & Chen, Hanwen, 2025. "Supply chain transparency and corporate financial fraud," Finance Research Letters, Elsevier, vol. 77(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Saeed, Asif & Hamid, Samreen & Manita, Riadh & Suntraruk, Phassawan, 2025. "CSR decoupling and financial fraud: Unveiling the hidden nexus in US-listed firms," Research in International Business and Finance, Elsevier, vol. 75(C).
    2. Yin, Lei & Sun, Guanglin & Kong, Tao, 2025. "Regional big data development and corporate financial fraud," Pacific-Basin Finance Journal, Elsevier, vol. 90(C).
    3. Jiang, Hui & Peng, Cheng & Ren, Daling, 2024. "Supply-chain finance digitalization and corporate financial fraud: Evidence from China," Economic Modelling, Elsevier, vol. 139(C).
    4. Shang, Zhaoyan & Chen, Hanwen, 2025. "Supply chain transparency and corporate financial fraud," Finance Research Letters, Elsevier, vol. 77(C).
    5. Wang, Mansi & Yu, Xinxin & Hong, Xinyi & Yang, Xiaotao, 2025. "Can digital finance promote green innovation collaboration in enterprises?," Global Finance Journal, Elsevier, vol. 65(C).
    6. Ge, Shilong & Luo, Xiaodan & Li, Yuangang & Zheng, Lanxing, 2024. "The impact of green credit policy on total factor productivity of enterprises," International Review of Economics & Finance, Elsevier, vol. 95(C).
    7. Gallucci, Carmen & Salvi, Antonio & Santulli, Rosalia & Tipaldi, Riccardo, 2025. "The use of positive language in equity crowdfunding pitches and fundraising success: The moderating role of punctuation," Research in International Business and Finance, Elsevier, vol. 73(PA).
    8. Zhao, Qiao & Wang, Wangqing, 2024. "Impact of digital financial tools on intermediate goods: Synergies between external funding and internal R&D investment," Finance Research Letters, Elsevier, vol. 67(PB).
    9. Li, Guowen & Wang, Shuai & Feng, Yuyao, 2024. "Making differences work: Financial fraud detection based on multi-subject perceptions," Emerging Markets Review, Elsevier, vol. 60(C).
    10. Khalid, Fahad & Irfan, Muhammad & Srivastava, Mohit, 2024. "The impact of digital inclusive finance on ESG disputes: Evidence from Chinese non-financial listed companies," Technological Forecasting and Social Change, Elsevier, vol. 204(C).
    11. Liang, Yixin & Wei, Ran & Duan, Dingkang, 2025. "Digital financial development and commercial bank stability," International Review of Economics & Finance, Elsevier, vol. 97(C).
    12. Guo, Xiaoxu & Wang, Yihan, 2025. "Effects of digital finance on enterprise total factor productivity: Evidence from the perspective of innovation level," Finance Research Letters, Elsevier, vol. 72(C).
    13. Li, Jing, 2025. "Corporate governance, fraud learning cycles, and financial fraud detection: Evidence from Chinese listed firms," Research in International Business and Finance, Elsevier, vol. 76(C).
    14. Zhang, Ping & Wang, Yiru, 2025. "Digital finance and stock price crash: Evidence from China," Emerging Markets Review, Elsevier, vol. 66(C).
    15. Sun, Guanglin & Yin, Ding & Kong, Tao & Yin, Lei, 2024. "The impact of the integration of the digital economy and the real economy on the risk of stock price collapse," Pacific-Basin Finance Journal, Elsevier, vol. 85(C).
    16. Shen, Hongshan & Qin, Mengyao & Li, Tianyi & Zhang, Xuan & Zhao, Yang, 2024. "Digital finance and industrial structure upgrading: Evidence from Chinese counties," International Review of Financial Analysis, Elsevier, vol. 95(PB).
    17. Khalid, Fahad & Sun, Xinhui & Akram, Rabia & Srivastava, Mohit, 2024. "Digital finance and corporate environmental violations," Finance Research Letters, Elsevier, vol. 66(C).
    18. Gao, Qiang & Sun, Mengyuan & Chen, Lu, 2024. "The impact of digital inclusive finance on agricultural economic resilience," Finance Research Letters, Elsevier, vol. 66(C).
    19. Chen, Shihua & Chen, Yulin & Jebran, Khalil, 2023. "Beyond the glass ceiling: Informal gender-based status hierarchy and corporate misconduct," Journal of Business Research, Elsevier, vol. 169(C).
    20. Chen, Tianyu & Yin, Ding & Li, Xinghua & Xu, Xuegao, 2025. "Media attention, information asymmetry and agribusiness ESG rating divergence," Finance Research Letters, Elsevier, vol. 74(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    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:eee:finlet:v:67:y:2024:i:pb:s1544612324009188. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    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.