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Legal protection strength, shareholder activism, and investors' irrational behavior

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  • Sun, Chunlei
  • Peng, Haiqing

Abstract

Based on data from Chinese A-share listed companies during 2015–2023, this paper explores the relationship among legal protection strength, shareholder activism, and investors' irrational behavior, and examines the moderating role of shareholder activism. The empirical findings are as follows: stronger legal protection is associated with less irrational behavior among investors; higher shareholder activism corresponds to more irrational behavior among investors; and shareholder activism negatively moderates the relationship between legal protection strength and investors' irrational behavior. This study provides important theoretical and practical insights for improving corporate governance structures and informing policy formulation.

Suggested Citation

  • Sun, Chunlei & Peng, Haiqing, 2026. "Legal protection strength, shareholder activism, and investors' irrational behavior," Finance Research Letters, Elsevier, vol. 87(C).
    • Handle: RePEc:eee:finlet:v:87:y:2026:i:c:s1544612325023359
    DOI: 10.1016/j.frl.2025.109086
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    References listed on IDEAS

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