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Silence is golden? Responses to rumors by Chinese listed firms

Author

Listed:
  • Liu, Kaiyi
  • Yuan, Xianghui
  • Wang, Chen
  • Hou, Wenxuan

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.

Suggested Citation

  • Liu, Kaiyi & Yuan, Xianghui & Wang, Chen & Hou, Wenxuan, 2022. "Silence is golden? Responses to rumors by Chinese listed firms," Finance Research Letters, Elsevier, vol. 49(C).
    • Handle: RePEc:eee:finlet:v:49:y:2022:i:c:s1544612322002884
    DOI: 10.1016/j.frl.2022.103055
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    References listed on IDEAS

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    More about this item

    Keywords

    Rumor; Information environment; Corporate governance; Fraud; Lawsuit;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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