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Local FinTech development and stock price crash risk

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  • Wang, Xinyue
  • Cao, Yuqiang
  • Feng, Zhuoan
  • Lu, Meiting
  • Shan, Yaowen

Abstract

This study investigates the effect of financial technology (FinTech) development on stock price crash risk. We show that the development of FinTech can inhibit management from deliberately hiding bad news and alleviate information asymmetry, thereby reducing stock price crash risk. This effect is more pronounced among non-state-owned enterprises, firms with poor information environments and low-quality internal controls, and those in competitive industries and regions with high marketization. Overall, these findings suggest that FinTech development can mitigate the deliberate concealment of bad news by management and improve the timeliness of disclosure, leading to lower risks faced by investors.

Suggested Citation

  • Wang, Xinyue & Cao, Yuqiang & Feng, Zhuoan & Lu, Meiting & Shan, Yaowen, 2023. "Local FinTech development and stock price crash risk," Finance Research Letters, Elsevier, vol. 53(C).
    • Handle: RePEc:eee:finlet:v:53:y:2023:i:c:s1544612323000181
    DOI: 10.1016/j.frl.2023.103644
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    2. Liu, Lihua & Cao, Lele & Cao, Yuqiang & Lu, Meiting & Shan, Yaowen, 2024. "VAT credit refunds and firm productivity: Evidence from China's VAT reform," International Review of Financial Analysis, Elsevier, vol. 93(C).
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    4. Zhang, Chaolin & Yu, Fangbo, 2024. "Can local fintech development improve analysts’ earnings forecast accuracy? Evidence from China," Finance Research Letters, Elsevier, vol. 63(C).
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    7. Zhou, Bo & Wang, Qunwei, 2024. "FinTech matters in sustainable finance: Does it redistribute the supply of financial services?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 91(C).
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    9. Dong, Xiao & Yu, Mingzhe, 2023. "Does FinTech development facilitate firms' innovation? Evidence from China," International Review of Financial Analysis, Elsevier, vol. 89(C).
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    More about this item

    Keywords

    Local FinTech development; Stock price crash risk; China;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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