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Corporate site visits, private monitoring and fraud: Evidence from China

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  • Broadstock, David
  • Chen, Xiaoqi

Abstract

Corporate site visits (CSVs) offer outsiders an opportunity to directly communicate with corporate managers. Through such visits, investors can not only acquire information from managers but also offer outside knowledge and/or personal suggestions to the managers. We conjecture that CSVs play a private monitoring role that will dissuade managers from dishonest or fraudulent financial practices. Using Chinese data, we show that the frequency of site visits is negatively related to the incidence of both corporate and managerial fraud. Our findings have implications for understanding the governance role of private monitoring.

Suggested Citation

  • Broadstock, David & Chen, Xiaoqi, 2021. "Corporate site visits, private monitoring and fraud: Evidence from China," Finance Research Letters, Elsevier, vol. 40(C).
    • Handle: RePEc:eee:finlet:v:40:y:2021:i:c:s1544612320315944
    DOI: 10.1016/j.frl.2020.101780
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    References listed on IDEAS

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    Cited by:

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    7. Sun, Guanglin & Li, Ting & Ai, Yongfang & Li, Qinghai, 2023. "Digital finance and corporate financial fraud," International Review of Financial Analysis, Elsevier, vol. 87(C).
    8. Bahník, Štěpán & Vranka, Marek, 2023. "How does probabilistic harm affect dishonesty? An experiment," Finance Research Letters, Elsevier, vol. 58(PB).
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    10. Su, Fei & Feng, Xu & Tang, Songlian, 2021. "Do site visits mitigate corporate fraudulence? Evidence from China," International Review of Financial Analysis, Elsevier, vol. 78(C).
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    12. Li, Wanli & Lai, Yin & Zhong, Yufen, 2024. "The closer the better: Supplier geographic proximity and corporate information disclosure violation," The North American Journal of Economics and Finance, Elsevier, vol. 69(PA).

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