IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v78y2025ics1544612325004490.html
   My bibliography  Save this article

Kick down the ladder? The impact of cryptocurrency bans on company legal risks and employee structure

Author

Listed:
  • Xu, Yi
  • Qi, Jiajun
  • Chen, Jilong
  • Feng, Lingbing

Abstract

This paper investigates the impact of cryptocurrency bans on company legal risks using a Difference-in-Differences framework. We find that such bans significantly reduce both the frequency and monetary value of lawsuits, lowering companies' legal exposure. Additionally, our analysis reveals that employees with financial backgrounds play a crucial role in helping companies mitigate legal risks in response to the ban's impact. However, as cryptocurrency-related financial activities are gradually phased out, the importance of these financially-skilled employees diminishes. Consequently, companies tend to "kick down the ladder" by dismissing these employees, highlighting an unintended consequence of the regulatory shift.

Suggested Citation

  • Xu, Yi & Qi, Jiajun & Chen, Jilong & Feng, Lingbing, 2025. "Kick down the ladder? The impact of cryptocurrency bans on company legal risks and employee structure," Finance Research Letters, Elsevier, vol. 78(C).
    • Handle: RePEc:eee:finlet:v:78:y:2025:i:c:s1544612325004490
    DOI: 10.1016/j.frl.2025.107186
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612325004490
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2025.107186?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. Clement Oppong & Abukari Salifu Atchulo & Ellis Kofi Akwaa-Sekyi & Dianne Dogbey Grant & Silas Apealete Kpegba, 2023. "Financial literacy, investment and personal financial management nexus: Empirical evidence on private sector employees," Cogent Business & Management, Taylor & Francis Journals, vol. 10(2), pages 2229106-222, December.
    2. Thorsten Beck & Ross Levine & Alexey Levkov, 2010. "Big Bad Banks? The Winners and Losers from Bank Deregulation in the United States," Journal of Finance, American Finance Association, vol. 65(5), pages 1637-1667, October.
    3. Griffith, Todd & Clancey-Shang, Danjue, 2023. "Cryptocurrency regulation and market quality," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 84(C).
    4. Wang, Kedi & Wu, Chen, 2023. "Financial-judicial specialization and corporate misconduct: Evidence from the establishment of the Shanghai Financial Court," Economics Letters, Elsevier, vol. 229(C).
    5. Feng, Lingbing & Qi, Jiajun & Lucey, Brian, 2024. "Enhancing cryptocurrency market volatility forecasting with daily dynamic tuning strategy," International Review of Financial Analysis, Elsevier, vol. 94(C).
    6. Chen, Su & Shen, Wenbin & Qiu, Zhiqiang & Liu, Rongzhi & Mardani, Abbas, 2023. "Who are the green entrepreneurs in China? The relationship between entrepreneurs’ characteristics, green entrepreneurship orientation, and corporate financial performance," Journal of Business Research, Elsevier, vol. 165(C).
    7. Chen, Conghui & Liu, Lanlan, 2022. "How effective is China's cryptocurrency trading ban?," Finance Research Letters, Elsevier, vol. 46(PB).
    8. Bai, Min & Zhang, Yuqi & Yu, Chia-Feng (Jeffrey), 2024. "Do firms gamble for resurrection from COVID-19?," Economics Letters, Elsevier, vol. 241(C).
    9. Ajithakumari Vijayappan Nair Biju & Ann Susan Thomas, 2023. "Uncertainties and ambivalence in the crypto market: an urgent need for a regional crypto regulation," SN Business & Economics, Springer, vol. 3(8), pages 1-21, August.
    10. Xu, Jing & Wang, Lu, 2025. "Social responsibility, board composition, and corporate legal risk," Finance Research Letters, Elsevier, vol. 77(C).
    11. Feng, Weilin & Meng, Yuqun & Tian, Li Grace & Tu, Steve & Wang, Yuran, 2023. "Corporate strategy and litigation risk," Finance Research Letters, Elsevier, vol. 58(PB).
    Full references (including those not matched with items on IDEAS)

    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. Saggu, Aman & Ante, Lennart & Kopiec, Kaja, 2025. "Uncertain Regulations, Definite Impacts: The Impact of the U.S. Securities and Exchange Commission's Regulatory Interventions on Crypto Assets," Finance Research Letters, Elsevier, vol. 72(C).
    2. Lin, Xudong & Zhu, Hao & Meng, Yiqun, 2025. "Financial order matters: The real effect of financial-judicial trials on stock price informativeness," International Review of Financial Analysis, Elsevier, vol. 102(C).
    3. Jia, Ce & Guo, Xiaodan & Tian, Ziyue & Xiao, Bowen, 2025. "Unintended consequences of SO2 mitigation: Increased PM and infant mortality in China," Energy Economics, Elsevier, vol. 144(C).
    4. Jureviciene Daiva & Pupelyte Laura, 2013. "Forecasting of the Influence of Financial Institutions Loan Portfolio Change for the Economic Sectors of the Country," Creative and Knowledge Society, Sciendo, vol. 3(1), pages 1-16, July.
    5. Tianjiao Zhao & Xiang Xiao & Qinghui Dai, 2021. "Transportation Infrastructure Construction and High-Quality Development of Enterprises: Evidence from the Quasi-Natural Experiment of High-Speed Railway Opening in China," Sustainability, MDPI, vol. 13(23), pages 1-23, December.
    6. Honghui Miao & Qingshuang Quan & Ming Yang, 2025. "Study on the Regional Carbon Emissions Reduction Effect of Green Manufacturing—A Policy Experiment Based on the Construction of Green Parks in China," Sustainability, MDPI, vol. 17(4), pages 1-23, February.
    7. Laiqun Jin & Xiuyan Liu & Sam Hak Kan Tang, 2021. "High-Technology Zones, Misallocation of Resources among Cities and Aggregate Productivity: Evidence from China," Economics Discussion / Working Papers 21-11, The University of Western Australia, Department of Economics.
    8. Johannes Blum & Klaus Gründler, 2020. "Political Stability and Economic Prosperity: Are Coups Bad for Growth?," CESifo Working Paper Series 8317, CESifo.
    9. Jin, Laiqun & Dai, Jiaying & Jiang, Weijie & Cao, Kairui, 2023. "Digital finance and misallocation of resources among firms: Evidence from China," The North American Journal of Economics and Finance, Elsevier, vol. 66(C).
    10. Bilin Neyapti, 2018. "Income distribution and economic crises," International Finance, Wiley Blackwell, vol. 21(3), pages 273-296, December.
    11. Lee, Hanol & Wie, Dainn, 2022. "Gone with the fire: Market reaction to cryptocurrency exchange shutdown," EconStor Preprints 266545, ZBW - Leibniz Information Centre for Economics.
    12. Zhangsheng Liu & Liuqingqing Yang & Liqin Fan, 2021. "Induced Effect of Environmental Regulation on Green Innovation: Evidence from the Increasing-Block Pricing Scheme," IJERPH, MDPI, vol. 18(5), pages 1-15, March.
    13. Lin, Ling & Xiao, Min & Yao, Rongrong & Zhang, Xiaoying, 2024. "Product market liberalization and corporate cash holdings: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 86(C).
    14. Laureti, Carolina & Szafarz, Ariane, 2023. "Banking regulation and costless commitment contracts for time-inconsistent agents," Economic Modelling, Elsevier, vol. 129(C).
    15. Dan Pan & Peiyao Zhou & Fanbin Kong, 2023. "Effect of place-based policy on regional economic growth: A quasi-natural experiment from China’s Old Revolutionary Development Program," PLOS ONE, Public Library of Science, vol. 18(7), pages 1-20, July.
    16. Hongfeng Zhang & Xiangjiang Ding & Yue Liu, 2023. "The Impact of Low-Carbon Pilot Cities on the Development of Digital Economy: Empirical Evidence from 284 Cities in China," Sustainability, MDPI, vol. 15(13), pages 1-21, June.
    17. Fan, Xiaomin & Xu, Yingzhi, 2023. "Does high-speed railway promote urban innovation? Evidence from China," Socio-Economic Planning Sciences, Elsevier, vol. 86(C).
    18. Lai, Tat-Kei & Wang, Luhang, 2024. "Spatial disparity of skill premium in China: The role of financial intermediation development," China Economic Review, Elsevier, vol. 85(C).
    19. Berger, Allen N. & Kick, Thomas & Schaeck, Klaus, 2014. "Executive board composition and bank risk taking," Journal of Corporate Finance, Elsevier, vol. 28(C), pages 48-65.
    20. Bo Liu & James D. Shilling & Tien Foo Sing, 2020. "Large Banks and Efficient Banks: how Do they Influence Credit Supply and Default Risk?," Journal of Financial Services Research, Springer;Western Finance Association, vol. 57(1), pages 1-28, February.

    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:78:y:2025:i:c:s1544612325004490. 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.