Local FinTech development and stock price crash risk

Xinyue Wang; Yuqiang Cao; Zhuoan Feng; Meiting Lu; Yaowen Shan

doi:10.1016/j.frl.2023.103644

Local FinTech development and stock price crash risk

Xinyue Wang, Yuqiang Cao^*, Zhuoan Feng, Meiting Lu, Yaowen Shan

^*Corresponding author for this work

Department of Accounting and Corporate Governance

Research output: Contribution to journal › Article › peer-review

45 Citations (Scopus)

Abstract

This study investigates the effect of financial technology (FinTech) development on stock price crash risk. We show that the development of FinTech can inhibit management from deliberately hiding bad news and alleviate information asymmetry, thereby reducing stock price crash risk. This effect is more pronounced among non-state-owned enterprises, firms with poor information environments and low-quality internal controls, and those in competitive industries and regions with high marketization. Overall, these findings suggest that FinTech development can mitigate the deliberate concealment of bad news by management and improve the timeliness of disclosure, leading to lower risks faced by investors.

Original language	English
Article number	103644
Pages (from-to)	1-12
Number of pages	12
Journal	Finance Research Letters
Volume	53
DOIs	https://doi.org/10.1016/j.frl.2023.103644
Publication status	Published - May 2023

Keywords

China
Local FinTech development
Stock price crash risk

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10.1016/j.frl.2023.103644

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abstract = "This study investigates the effect of financial technology (FinTech) development on stock price crash risk. We show that the development of FinTech can inhibit management from deliberately hiding bad news and alleviate information asymmetry, thereby reducing stock price crash risk. This effect is more pronounced among non-state-owned enterprises, firms with poor information environments and low-quality internal controls, and those in competitive industries and regions with high marketization. Overall, these findings suggest that FinTech development can mitigate the deliberate concealment of bad news by management and improve the timeliness of disclosure, leading to lower risks faced by investors.",

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AU - Cao, Yuqiang

AU - Feng, Zhuoan

AU - Lu, Meiting

AU - Shan, Yaowen

PY - 2023/5

Y1 - 2023/5

N2 - This study investigates the effect of financial technology (FinTech) development on stock price crash risk. We show that the development of FinTech can inhibit management from deliberately hiding bad news and alleviate information asymmetry, thereby reducing stock price crash risk. This effect is more pronounced among non-state-owned enterprises, firms with poor information environments and low-quality internal controls, and those in competitive industries and regions with high marketization. Overall, these findings suggest that FinTech development can mitigate the deliberate concealment of bad news by management and improve the timeliness of disclosure, leading to lower risks faced by investors.

AB - This study investigates the effect of financial technology (FinTech) development on stock price crash risk. We show that the development of FinTech can inhibit management from deliberately hiding bad news and alleviate information asymmetry, thereby reducing stock price crash risk. This effect is more pronounced among non-state-owned enterprises, firms with poor information environments and low-quality internal controls, and those in competitive industries and regions with high marketization. Overall, these findings suggest that FinTech development can mitigate the deliberate concealment of bad news by management and improve the timeliness of disclosure, leading to lower risks faced by investors.

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KW - Local FinTech development

KW - Stock price crash risk

UR - https://www.scopus.com/pages/publications/85149689575

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ER -

Local FinTech development and stock price crash risk

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Keywords

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