{"title":"Financial-judicial specialization and stock price crash risk: Evidence from China","authors":"Kedi Wang , Chen Wu","doi":"10.1016/j.intfin.2024.101941","DOIUrl":null,"url":null,"abstract":"<div><p>Our paper examines the impact of the improved financial-judicial specialization on Chinese capital market considering the establishment of China’s first financial court, that is, the Shanghai Financial Court, as an exogenous shock. Using a difference-in-differences (DID) estimation, we find that greater financial-judicial specialization is associated with lower risk of stock price crash. Our results also show that this effect is more pronounced for firms with poor internal control, opaque information environment, and weak internal supervision. The mechanism analysis also shows that the improvement of financial-judicial specialization will also lead to act less opportunistically and disclose more bad news. Overall, the results shed light on the important role of financial-judicial specialization in the Chinese capital market.</p></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"91 ","pages":"Article 101941"},"PeriodicalIF":5.4000,"publicationDate":"2024-01-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of International Financial Markets Institutions & Money","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S1042443124000076","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
Our paper examines the impact of the improved financial-judicial specialization on Chinese capital market considering the establishment of China’s first financial court, that is, the Shanghai Financial Court, as an exogenous shock. Using a difference-in-differences (DID) estimation, we find that greater financial-judicial specialization is associated with lower risk of stock price crash. Our results also show that this effect is more pronounced for firms with poor internal control, opaque information environment, and weak internal supervision. The mechanism analysis also shows that the improvement of financial-judicial specialization will also lead to act less opportunistically and disclose more bad news. Overall, the results shed light on the important role of financial-judicial specialization in the Chinese capital market.
期刊介绍：
International trade, financing and investments, and the related cash and credit transactions, have grown at an extremely rapid pace in recent years. The international monetary system has continued to evolve to accommodate the need for foreign-currency denominated transactions and in the process has provided opportunities for its ongoing observation and study. The purpose of the Journal of International Financial Markets, Institutions & Money is to publish rigorous, original articles dealing with the international aspects of financial markets, institutions and money. Theoretical/conceptual and empirical papers providing meaningful insights into the subject areas will be considered. The following topic areas, although not exhaustive, are representative of the coverage in this Journal. • International financial markets • International securities markets • Foreign exchange markets • Eurocurrency markets • International syndications • Term structures of Eurocurrency rates • Determination of exchange rates • Information, speculation and parity • Forward rates and swaps • International payment mechanisms • International commercial banking; • International investment banking • Central bank intervention • International monetary systems • Balance of payments.
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