Silence is golden? Responses to rumors by Chinese listed firms

Kaiyi Liu, Xianghui Yuan*, Chen Wang, Wenxuan Hou

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

Rumors are common in capital markets and firms face a strategic decision of whether or not to respond to them. This research explores the implications of official response to rumors and find that responded firms tend to experience enforcement actions against corporate fraud and lawsuits. The results are concentrated on private firms. Our results are in line with the agency theory interpretation of firms’ response to rumors.

Original languageEnglish
Article number103055
JournalFinance Research Letters
Volume49
Early online date8 Jun 2022
DOIs
Publication statusE-pub ahead of print - 8 Jun 2022

Keywords

  • corporate governance
  • fraud
  • information environment
  • lawsuit
  • rumor

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