IDEAS home Printed from https://ideas.repec.org/a/eee/finana/v97y2025ics1057521924007853.html
   My bibliography  Save this article

International evidence on the relationship between fraud tolerance and stock price crash risk

Author

Listed:
  • Yung, Kenneth
  • Askarzadeh, Alireza

Abstract

Employing a sample of 16,718 firms across 38 countries from 2000 to 2022, we find that ex ante attitudes in society toward dishonest behavior, instead of fraudulent acts, are adequate to provoke firm-level stock price crash risk. Specifically, we document that fraud tolerance in society is positively related to crash risk. The result implies that fraud tolerance promotes managerial opportunistic behavior such as bad news hoarding. Robustness checks show that the result holds after we account for potential issues of endogeneity. We also find evidence implying that ineffective monitoring is a channel connecting fraud tolerance and crash risk. Additional analyses provide results suggesting that fraud tolerance is a persistent behavioral norm unaffected by national culture, including individualism, uncertainty avoidance, and long-term orientation.

Suggested Citation

  • Yung, Kenneth & Askarzadeh, Alireza, 2025. "International evidence on the relationship between fraud tolerance and stock price crash risk," International Review of Financial Analysis, Elsevier, vol. 97(C).
    • Handle: RePEc:eee:finana:v:97:y:2025:i:c:s1057521924007853
    DOI: 10.1016/j.irfa.2024.103853
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1057521924007853
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.irfa.2024.103853?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finana:v:97:y:2025:i:c:s1057521924007853. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/620166 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.