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Stock market volatility and white-collar criminal behavior: an empirical study of corporate fraud during the financial crisis

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  • Shi, Shun
  • Zou, Kaicheng
  • Zheng, Yinglong

Abstract

Based on sample data from Chinese A-share listed companies between 2007 and 2015, this study finds a positive relationship between stock market volatility and corporate white-collar crime during the financial crisis. Specifically, the greater the stock market volatility, the higher the likelihood of corporate white-collar crime occurring. Financing efficiency plays a mediating role in the relationship between stock market volatility and white-collar crime; stock market volatility influences financing efficiency, which in turn affects white-collar crime. The growth rate of operating income moderates the relationship between stock market volatility and white-collar crime. The nature of the enterprise has a heterogeneous impact on the relationship between stock market volatility and white-collar crime, with non-state-owned enterprises (NSOEs) being more susceptible to stock market volatility. The employment of one of the "Big Four" accounting firms has a heterogeneous effect on the relationship between stock market volatility and white-collar crime, with firms that do not hire these accounting firms being more influenced by stock market volatility. This study further suggests that strengthening internal compliance systems, enhancing the independence of accounting audits, and promoting the rule of law in capital market systems can effectively curb corporate white-collar crime during periods of financial instability.

Suggested Citation

  • Shi, Shun & Zou, Kaicheng & Zheng, Yinglong, 2025. "Stock market volatility and white-collar criminal behavior: an empirical study of corporate fraud during the financial crisis," Finance Research Letters, Elsevier, vol. 86(PD).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pd:s1544612325018914
    DOI: 10.1016/j.frl.2025.108637
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