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Government debt and stock price crash risk: International Evidence

Author

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  • Hamdi Ben-Nasr

    (Qatar University)

  • Sabri Boubaker

    (VNU - Vietnam National University [Hanoï], Métis Lab EM Normandie - EM Normandie - École de Management de Normandie, Swansea University)

Abstract

We add to the literature on the economic outcomes of government debt and argue that government debt increases crash risk via two channels: (i) hoarding bad news and (ii) tax avoidance. Based on a large international sample, our results indicate that stock crash risk is positively associated with government debt. Our conclusions are robust when we treat endogeneity issues, and our tests confirm the validity of bad news hoarding and tax avoidance as channels through which government debt influences stock price crash risk.

Suggested Citation

  • Hamdi Ben-Nasr & Sabri Boubaker, 2024. "Government debt and stock price crash risk: International Evidence," Post-Print hal-04648524, HAL.
    • Handle: RePEc:hal:journl:hal-04648524
    DOI: 10.1016/j.jfs.2024.101245
    Note: View the original document on HAL open archive server: https://hal.science/hal-04648524
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    Keywords

    Government debt; Fiscal policy uncertainty; Bad news hoarding; Tax avoidance; Crash risk;
    All these keywords.

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