Fintech development and corporate misconduct

Abstract

This study investigates the impact of fintech development in a region on the likelihood of corporate misconduct. Fintech has the potential to reduce information asymmetry, provide financial resources, and enhance monitoring, thereby deterring corporate misconduct. Data from publicly listed firms in China shows that firms in regions with advanced fintech development are less likely to engage in financial misconduct. Furthermore, this study explores the interaction between formal and informal institutions, demonstrating that in regions with higher levels of social trust, the effect of fintech on corporate misconduct is less pronounced. Institutional ownership, as a key governance mechanism, moderates the relationship between fintech development and corporate misconduct.