IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v67y2024ipbs1544612324009474.html

Does fintech innovation impact corporate fraud? Evidence from China

Author

Listed:
  • Tang, Mengxuan
  • Hu, Yang
  • Hou, Yang (Greg)
  • Goodell, John W.

Abstract

This study examines the effect of fintech innovation on corporate fraud using data from Chinese listed companies. The empirical results show that fintech innovation negatively influences corporate fraud. Reducing information asymmetry and alleviating financial constraints are two plausible channels. The results of the heterogeneity tests reveal that this negative impact is more pronounced for firms with high internal performance pressures, poor internal governance, and lenient external regulatory environments. Moreover, we analyze the relationship between fintech innovation and different types of fraud and confirm that fintech significantly inhibits disclosure and operational fraud.

Suggested Citation

  • Tang, Mengxuan & Hu, Yang & Hou, Yang (Greg) & Goodell, John W., 2024. "Does fintech innovation impact corporate fraud? Evidence from China," Finance Research Letters, Elsevier, vol. 67(PB).
    • Handle: RePEc:eee:finlet:v:67:y:2024:i:pb:s1544612324009474
    DOI: 10.1016/j.frl.2024.105917
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612324009474
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2024.105917?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. Shane A. Johnson & Harley E. Ryan & Yisong S. Tian, 2009. "Managerial Incentives and Corporate Fraud: The Sources of Incentives Matter," Review of Finance, European Finance Association, vol. 13(1), pages 115-145.
    2. Lv, Panpan & Xiong, Hu, 2022. "Can FinTech improve corporate investment efficiency? Evidence from China," Research in International Business and Finance, Elsevier, vol. 60(C).
    3. Ding, Na & Gu, Leilei & Peng, Yuchao, 2022. "Fintech, financial constraints and innovation: Evidence from China," Journal of Corporate Finance, Elsevier, vol. 73(C).
    4. Liang, Quanxi & Gao, Wenlian & Xie, Hongji, 2022. "Do foreign investors deter corporate fraud? Evidence from China," The Quarterly Review of Economics and Finance, Elsevier, vol. 84(C), pages 92-111.
    5. Martin J. Conyon & Lerong He, 2016. "Executive Compensation and Corporate Fraud in China," Journal of Business Ethics, Springer, vol. 134(4), pages 669-691, April.
    6. Jünger, Moritz & Mietzner, Mark, 2020. "Banking goes digital: The adoption of FinTech services by German households," Finance Research Letters, Elsevier, vol. 34(C).
    7. Tang, Mengxuan & Hu, Yang & Corbet, Shaen & Hou, Yang (Greg) & Oxley, Les, 2024. "Fintech, bank diversification and liquidity: Evidence from China," Research in International Business and Finance, Elsevier, vol. 67(PA).
    8. Lei, Jin & Qiu, Jiaping & Wan, Chi, 2018. "Asset tangibility, cash holdings, and financial development," Journal of Corporate Finance, Elsevier, vol. 50(C), pages 223-242.
    9. Itay Goldstein & Wei Jiang & G Andrew Karolyi, 2019. "To FinTech and Beyond," The Review of Financial Studies, Society for Financial Studies, vol. 32(5), pages 1647-1661.
    10. Phan, Dinh Hoang Bach & Narayan, Paresh Kumar & Rahman, R. Eki & Hutabarat, Akhis R., 2020. "Do financial technology firms influence bank performance?," Pacific-Basin Finance Journal, Elsevier, vol. 62(C).
    11. Toni M. Whited & Guojun Wu, 2006. "Financial Constraints Risk," The Review of Financial Studies, Society for Financial Studies, vol. 19(2), pages 531-559.
    12. Tang, Mengxuan & Hou, Yang (Greg) & Goodell, John W. & Hu, Yang, 2024. "Fintech and corporate risk-taking: Evidence from China," Finance Research Letters, Elsevier, vol. 64(C).
    13. Cheng, Maoyong & Qu, Yang, 2020. "Does bank FinTech reduce credit risk? Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 63(C).
    14. Zhao, Yang & Goodell, John W. & Wang, Yong & Abedin, Mohammad Zoynul, 2023. "Fintech, macroprudential policies and bank risk: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 87(C).
    15. Alexander Dyck & Adair Morse & Luigi Zingales, 2010. "Who Blows the Whistle on Corporate Fraud?," Journal of Finance, American Finance Association, vol. 65(6), pages 2213-2253, December.
    16. Guo, Junyan & Fang, Hanqing & Liu, Xuexin & Wang, Cizhi & Wang, Yuan, 2023. "FinTech and financing constraints of enterprises: Evidence from China," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 82(C).
    17. Drobetz, Wolfgang & Grüninger, Matthias C. & Hirschvogl, Simone, 2010. "Information asymmetry and the value of cash," Journal of Banking & Finance, Elsevier, vol. 34(9), pages 2168-2184, September.
    18. Stijn Claessens & Simeon Djankov & Joseph P. H. Fan & Larry H. P. Lang, 2002. "Disentangling the Incentive and Entrenchment Effects of Large Shareholdings," Journal of Finance, American Finance Association, vol. 57(6), pages 2741-2771, December.
    19. Wen, Huiyu & Fang, Jincheng & Gao, Haoyu, 2023. "How FinTech improves financial reporting quality? Evidence from earnings management," Economic Modelling, Elsevier, vol. 126(C).
    20. Karpoff, Jonathan M., 2021. "The future of financial fraud," Journal of Corporate Finance, Elsevier, vol. 66(C).
    21. Zhao, Yang & Goodell, John W. & Dong, Qingli & Wang, Yong & Abedin, Mohammad Zoynul, 2022. "Overcoming spatial stratification of fintech inclusion: Inferences from across Chinese provinces to guide policy makers," International Review of Financial Analysis, Elsevier, vol. 84(C).
    22. Vikramaditya Khanna & E. Han Kim & Yao Lu, 2015. "CEO Connectedness and Corporate Fraud," Journal of Finance, American Finance Association, vol. 70(3), pages 1203-1252, June.
    23. Chen, Donghua & Chen, Yinying & Li, Oliver Zhen & Ni, Chenkai, 2018. "Foreign residency rights and corporate fraud," Journal of Corporate Finance, Elsevier, vol. 51(C), pages 142-163.
    24. Chen, Yunyan & Wu, Shinong & Zhou, Yucheng & Huo, Di, 2023. "Gambling culture and corporate violations: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 80(C).
    25. Liang, Quanxi & Wang, Zhimin & Guan, Xin & Qin, Wei, 2023. "Party direct control and corporate fraud: Evidence from China," The Quarterly Review of Economics and Finance, Elsevier, vol. 92(C), pages 274-290.
    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. Zhou, Yong & Liu, Siting & Song, Wei, 2025. "Bankruptcy court establishment and corporate financial fraud," International Review of Economics & Finance, Elsevier, vol. 100(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. Tang, Mengxuan & Hu, Yang & Hou, Yang (Greg) & Oxley, Les & Goodell, John W., 2025. "Fintech development and corporate financial policy: Evidence from corporate financing and investment," Journal of International Money and Finance, Elsevier, vol. 157(C).
    2. Tang, Mengxuan & Hu, Yang & Hou, Yang (Greg) & Oxley, Les & Goodell, John W., 2025. "Fintech development, corporate tax avoidance and firm value," International Review of Financial Analysis, Elsevier, vol. 97(C).
    3. Chen, Xuchang & Zhang, Zhu, 2025. "Fintech development and corporate misconduct," Technological Forecasting and Social Change, Elsevier, vol. 213(C).
    4. Li, Yunzhong & Ye, Chengfang & Li, Mingxi & Shum, Wai Yan & Lai, Fujun, 2025. "Regional FinTech development and total factor productivity among firms: Evidence from China," The North American Journal of Economics and Finance, Elsevier, vol. 75(PA).
    5. Lei Xu & Qian Liu & Bin Li & Chen Ma, 2022. "Fintech business and firm access to bank loans," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(4), pages 4381-4421, December.
    6. Zhao, Ziying & Lu, Chao & Xia, Xiaoxue, 2024. "Regulator as a minority shareholder and corporate fraud: Quasi-natural experiment evidence from the pilot project of China Securities Investor Services Center," The British Accounting Review, Elsevier, vol. 56(5).
    7. Liu, Juecen & Tang, Mengxuan & Goodell, John W. & Hu, Yang, 2025. "Informal financing access: Can fintech development affect trade credit access?," Finance Research Letters, Elsevier, vol. 71(C).
    8. Liu, Zhuang & Li, Xingyi, 2024. "The impact of bank fintech on ESG greenwashing," Finance Research Letters, Elsevier, vol. 62(PB).
    9. Tang, Mengxuan & Hou, Yang (Greg) & Goodell, John W. & Hu, Yang, 2024. "Fintech and corporate risk-taking: Evidence from China," Finance Research Letters, Elsevier, vol. 64(C).
    10. Wen, Huiyu & Fang, Jincheng & Gao, Haoyu, 2023. "How FinTech improves financial reporting quality? Evidence from earnings management," Economic Modelling, Elsevier, vol. 126(C).
    11. Wu, Fang & Cao, June & Zhang, Xiaosan, 2023. "Do non-executive employees matter in curbing corporate financial fraud?," Journal of Business Research, Elsevier, vol. 163(C).
    12. Xin Xu & Feng Xiong & Zhe An, 2023. "Using Machine Learning to Predict Corporate Fraud: Evidence Based on the GONE Framework," Journal of Business Ethics, Springer, vol. 186(1), pages 137-158, August.
    13. Guo, Pin & Zhang, Cheng, 2023. "The impact of bank FinTech on liquidity creation: Evidence from China," Research in International Business and Finance, Elsevier, vol. 64(C).
    14. Xing Chen & Fenghua Wen & Jinli Xiao & Gary Gang Tian, 2025. "Weathering the Risk: How Climate Uncertainty Fuels Corporate Fraud," Journal of Business Ethics, Springer, vol. 201(2), pages 519-547, October.
    15. Liu, Haiming & Hu, Jikong, 2024. "The impact of bank fintech on corporate debt default," Pacific-Basin Finance Journal, Elsevier, vol. 86(C).
    16. Sun, Yanyang & Gao, Jun & Wu, Wenruo & Liu, Suyi, 2025. "ESG performance and corporate fraud: Evidence based on the MOE framework," International Review of Financial Analysis, Elsevier, vol. 97(C).
    17. Wang, Yichen & Hu, Jun & Chen, Jia, 2023. "Does Fintech facilitate cross-border M&As? Evidence from Chinese A-share listed firms," International Review of Financial Analysis, Elsevier, vol. 85(C).
    18. Cheng, Xiaoqiang & Guo, Wenjuan & Teng, Yue & Yao, Dingjun & Zhou, Hua, 2025. "Impact of fintech on carbon emissions in China: Evidence from the perspectives of green finance and financial efficiency," Finance Research Letters, Elsevier, vol. 86(PB).
    19. Liu, Haiming & Hu, Jikong, 2025. "Bank Fintech and firm leverage adjustment speed: Evidence from China," Research in International Business and Finance, Elsevier, vol. 73(PA).
    20. Li, Feifei & Xue, Ruile & Du, Mingyue & Liu, Yuxing, 2025. "Fintech, banking competition and corporate leverage manipulation," Pacific-Basin Finance Journal, Elsevier, vol. 94(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:s1544612324009474. 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.