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Do confucianism and political connections affect stock price crash risk: evidence from Chinese economy?

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  • Usman Bashir
  • Yugang Yu

Abstract

Utilizing a large dataset on Chinese A-Share listed firms comprising 18763 firm-year observation for the period of 2001–2015, we examined whether Confucianism and political connections lessen the stock price crash risk of firms by using geographical-proximity-based Confucianism variables. Our findings point towards the evidence that firms situated in China with higher levels of Confucianism reveal low levels of stock price crash risk and this relationship is incrementally significant for politically connected firms while controlling for a battery of control variables. Our results are robust by using alternate proxies.

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  • Usman Bashir & Yugang Yu, 2020. "Do confucianism and political connections affect stock price crash risk: evidence from Chinese economy?," Applied Economics Letters, Taylor & Francis Journals, vol. 27(7), pages 569-575, April.
    • Handle: RePEc:taf:apeclt:v:27:y:2020:i:7:p:569-575
    DOI: 10.1080/13504851.2019.1644418
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    Cited by:

    1. Yensen Ni & Min-Yuh Day & Yirung Cheng & Paoyu Huang, 2022. "Can investors profit by utilizing technical trading strategies? Evidence from the Korean and Chinese stock markets," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-21, December.
    2. Yongbo Ge & Xiaoran Kong & Geilegeilao Dadilabang & Kung‐Cheng Ho, 2023. "The effect of Confucian culture on household risky asset holdings: Using categorical principal component analysis," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(1), pages 839-857, January.
    3. Wang, Xiaoting & Hou, Siyuan & Shen, Jie, 2021. "Default clustering of the nonfinancial sector and systemic risk: Evidence from China," Economic Modelling, Elsevier, vol. 96(C), pages 196-208.

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