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Couple-based leadership and default risk: Evidence from China

Author

Listed:
  • Zhao, Weijia
  • Cui, Xin
  • Wang, Chunfeng
  • Wu, Ji (George)
  • He, Feng

Abstract

This paper investigates how leadership by married couples (marital leadership) affects the default risk of listed firms. Using unique manually collected data from China, we show that marital leadership significantly increases default risk. The relationship is robust after conducting a series of robustness tests and controlling for endogenous problems. In addition, we find that the prominent agency conflict, inefficient decision-making, and supervision led by married couples limit the willingness and ability to execute contracts, which leads to higher default risk. Furthermore, we also provide evidence that the effect of marital leadership on default risk varies across firm characteristics and the market environment, where it is stronger for firms with small-cap, low-risk resistance and when economic policy uncertainty is higher.

Suggested Citation

  • Zhao, Weijia & Cui, Xin & Wang, Chunfeng & Wu, Ji (George) & He, Feng, 2022. "Couple-based leadership and default risk: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 80(C), pages 439-463.
    • Handle: RePEc:eee:reveco:v:80:y:2022:i:c:p:439-463
    DOI: 10.1016/j.iref.2022.02.071
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    1. Meng, Qingbin & Huang, Haozheng & Li, Xinyu & Wang, Song, 2023. "Short-selling and corporate default risk: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 87(C), pages 398-417.
    2. Zhongfang Zhang & Lijun Hou & Yuhao Qian & Xing Wan, 2022. "Effect of Zero Growth of Fertilizer Action on Ecological Efficiency of Grain Production in China under the Background of Carbon Emission Reduction," Sustainability, MDPI, vol. 14(22), pages 1-16, November.
    3. Thakerngkiat, Narongdech & Nguyen, Hung T. & Nguyen, Nhut H. & Visaltanachoti, Nuttawat, 2023. "Does fear spur default risk?," International Review of Economics & Finance, Elsevier, vol. 83(C), pages 879-899.

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    More about this item

    Keywords

    Marital leadership; Default risk; Corporate governance; The Chinese stock market;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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