Commonality in liquidity and corporate default risk - Evidence from China

Yumei Fu, Feng He, Jintian Li, Bingyan Zan

Research output: Contribution to journalArticlepeer-review

Abstract

We investigate the impact of commonality in liquidity on corporate default risk. Using the sample of Chinese A-share listed companies from 2009 to 2019, we find that commonality in liquidity significantly increases corporate default risk. This effect is achieved by increasing firm's financial constraints and reducing the firm's solvency. We further find state ownership, information disclosure, institutional investors’ shareholding, audit supervision, prefecture level marketization process and digital finance development can weaken the impact of commonality in liquidity on corporate default risk.

Original languageEnglish
Article number102280
Number of pages21
JournalResearch in International Business and Finance
Volume69
Early online date20 Feb 2024
DOIs
Publication statusPublished - Apr 2024

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