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Market integration and the risk of corporate leverage manipulation: Evidence from China

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  • Li, Sihui
  • Liu, Yining
  • Zhao, Jinchun
  • Xu, Baochang

Abstract

We examine the impact of market integration on the risk of corporate leverage manipulation, using data on China's A-share listed firms. Our results indicate that market integration reduces this risk. This effect is more pronounced for firms in the Midwest, small firms, and those receiving less analyst attention. We also find that market integration promotes fair competition, reduces financing constraints, and improves information transparency, thereby reducing the risk of corporate leverage manipulation. This study provides a useful reference for promoting the construction of a unified domestic market and maintaining stability in the financial system.

Suggested Citation

  • Li, Sihui & Liu, Yining & Zhao, Jinchun & Xu, Baochang, 2024. "Market integration and the risk of corporate leverage manipulation: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 88(C).
    • Handle: RePEc:eee:pacfin:v:88:y:2024:i:c:s0927538x24003196
    DOI: 10.1016/j.pacfin.2024.102567
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